Insurance Europe has written to the European Commission highlighting the importance that technical negotiations of the EU’s Solvency II review stay aligned with the political agreement and EU goals on climate change, financing the green and digital transitions, the Capital Markets Union and increasing competitiveness.
The letter, addressed to European Commission Vice-President Dombrovskis and Commissioner McGuinness, cautions that deviations in the Level 2 technical negotiations from the agreed prudential regime goals will impair the industry’s ability to support broader EU policy objectives.
The European insurance industry provides protection against risks for people, businesses and economies, and it is one of the largest institutional investors.
The sector also contributes to Europe’s global leadership and competitiveness, as it has a significant business presence internationally.
Sent just before the initial technical discussions by the EC’s Expert Group on Banking, Payments, and Insurance, the letter expresses Insurance Europe’s concern.
As the federation of insurance associations, Insurance Europe emphasizes the importance of these technical details in shaping the review’s impact and benefits.
For example, the industry notes that there should be no backpedalling on the agreement reached between the EU Parliament and Council to limit the impact the impact of changes to the risk correction – a key element of the Volatility Adjustment which protects insurers against unnecessary volatility from financial markets.
Accurate calibration of key factors, such as the extrapolation of risk-free interest rates and risk margins, is crucial.
In its position paper, “Delivering on the Agreed Ambitions for the Solvency II Review,” Insurance Europe urges the European Commission to fulfill its commitment to reduce the reporting burden by 25%, which is currently hindering innovation and investment.
Insurance Europe therefore fully agrees that there is a need to address what has become an excessive reporting burden. Insurers highlight in the annex areas where reductions are needed and provide some specific examples of how to reduce the current burden.
However, Insurance Europe also urges the EC to recognise that this burden is created not only by too many reporting requirements, but also by duplications and overlaps between different pieces of legislation, lack of sufficient time to implement the requirements, and a lack of clarity and the timely provision of Q&As.
