Insurers slam Solvency II process
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Four pan-European insurance bodies have written a damning letter to the European Commission over developments with the Solvency II process, warning that the project’s failure will have dire industry consequences.
The Pan European Insurance Forum, the CEA (the European insurance and reinsurance federation), the European Insurance Chief Financial Officers’ Forum, and the Chief Risk Officers’ Forum have written to European Commissioner for Internal Market and Services Michel Barnier (pictured) saying that their concerns over Solvency II have largely been ignored.
The letter expresses concern that the current draft text of Solvency II risks driving insurers out of their long-term business, and that the current text is “overly conservative.”
The bodies say that if Solvency II fails as a result this would penalise the growth of insurers, and introduce a complex framework that does not guarantee financial stability or consumer protection.
The letter says: “The genuine and valid concerns of the industry have been largely ignored or remain unaddressed. The latest draft Level 2 implementing measures/delegating acts have intensified our concerns rather than assuaged them. In fact, if anything, the text has moved further away from the economic principles enshrined in the Framework Directive.
“Stakes are high and time is running out: a failure to properly implement this reform would have dire consequences for an industry that represents a significant component of the EU economy, capital markets, old age savings and jobs.”
The Association of British Insurers is a member of the CEA, one of the four bodies that wrote to Barnier.
ABI director of financial regulation and taxation Peter Vipond says: “It has now been ten years since the principles of Solvency II were proposed. Yet we have still to agree the rules. This is bad news for all. For regulators and firms, it makes a proposed start date of January 2013 difficult. For insurers the current draft of the rules are poorly thought through in places, leading to them holding unnecessarily high levels of capital, ultimately penalising consumers.
“This joint letter signals both the industry’s concern but also its determination to work with regulators to finalise the rules quickly and make them work for a long time.”
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