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Annette Olesen, group chief risk officer at Nordea Life and Pensions, said the low interest rate environment had forced insurers to abandon traditional guaranteed products, but there was still a place for new products with other forms of guarantee. However, Solvency II needed to change to support long-term insurance products with guarantees. At the same time, insurers needed to develop products that customers could understand, and communicate the products' features clearly, she said. "Consumers need insurance more than ever. But how can we meet that?" said Olesen.
Solvency II's treatment of long-term guarantees and the assets used to match them would be crucial if long-term products were to be viable. "It will be down to capital requirements and profitability. There is a need [for guarantees], but we have to be able to deliver them and get the capital requirements. We need solutions to be able to offer these products to consumers", Olesen said.
Referring to Solvency II's matching adjustment, which is currently under development, Olesen said that while the mechanism had been advocated by the UK insurance industry there could be benefits for the Nordic market. "If we offer long-term guarantees, will we be able to back them with long-term assets? If we can look at assets and liabilities together, it could be in consumers' interests", she said.
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