Insurance Europe has warned that the European Commission’s draft Level 2 measures for Solvency II fall short of political commitments and could stall economic growth while locking up billions in potential long-term investment.
In its consultation response, the federation representing 39 national insurance associations said it continues to support a framework that safeguards policyholders and financial stability.
But it argued the Commission’s technical approach fails to deliver on the ambition promised by the European Parliament and Council when the Level 1 reforms were agreed last year.
According to Insurance Europe, the draft rules do not properly tackle artificial volatility, leaving balance sheets overly sensitive to market swings.
The group cited a poorly calibrated Volatility Adjustment and a restrictive approach to setting long-term interest rates as key weaknesses. It also said limits on long-term equity remain too strict, preventing capital from flowing into productive projects.
While welcoming planned cuts to the risk margin, Insurance Europe said the changes remain misaligned with global practices, potentially leaving European insurers at a competitive disadvantage.
Instead of reducing bureaucracy, the proposals risk adding complexity and compliance costs, undermining the EU’s stated aim of proportionality and simplification.
Angus Scorgie, head of prudential regulation at Insurance Europe, said the current draft risks missing the moment.
After many years of discussion, now is the time for the Solvency II review to deliver on its promise: combining protection for policyholders and financial stability with growth and resilience for Europe’s economy and less red tape for insurers
Angus Scorgie, head of prudential regulation at Insurance Europe
“Without improvements to the draft proposals, the review will fall short on strengthening European insurers’ contribution to financing the EU’s priorities of competitiveness and growth,” he said.
The Commission’s Level 2 measures will set the technical details for implementing Solvency II across the bloc. Unless revised, Insurance Europe warned, the EU risks losing a major opportunity to align insurance regulation with its wider objectives for long-term growth, competitiveness, and investment.
