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Van Hulle, who retired at the end of February as leader of the Commission's Solvency II project, warns, in an interview with Insurance Risk, that the emphasis on promoting long-term investment by insurers could be detrimental to the sector and policyholders. The focus of policy-makers, he says, should be on developing a sound, risk-based solvency regime.
The European Commission is consulting on ways to increase the supply of long-term financing to investment projects such as energy, communications and transport infrastructure as a way to boost growth in Europe.
The insurance industry is seen as key provider of long-term finance and the European Insurance and Occupational Pensions Authority (EIOPA) is currently examining whether Solvency II's standard formula's design and calibrations in relation to insurers' long-term investments in certain asset classes should be adjusted.
Last week, EIOPA published the results of its preliminary analysis in which it found that there was no evidence to suggest that the calibrations should be amended. It will publish its final report in July.
Van Hulle also stresses that European rule-makers should not to try to develop a perfect Solvency II regime and instead should concentrate on finding a swift agreement on the main outstanding issues once the long-term guarantees impact assessment (LTGA) is completed.
The comments are echoed by EIOPA executive director Carlos Montalvo. Responding to the insurance industry's calls for Solvency II's currency risk calibrations to be amended, Montalvo says Solvency II needs to be finalised quickly and that imperfections can be addressed once the regime is in force. EIOPA, he says, is examining the proposals on currency risk. "However, the legal process is still ongoing, therefore we prefer not to make any speculations prior to the finalisation of the Omnibus II Directive", he adds.
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