View more on these topics

Insurers secure critical ‘matching premium’ Solvency II amendment

Insurers and UK politicians have secured a last ditch amendment to Solvency II rules which could prevent a 20 per cent drop in annuity rates.

There had been concern that measures put forward by the ECON committee of the European Parliament would not contain reference to a so-called ‘matching premium’.

The ABI says the premium is needed to remove the requirement for insurers to take into account market volatility that they are not exposed to. It says failure to include reference to the premium in the Solvency II rules could have forced insurers to hold an additional £50bn in capital, causing a 10 – 20 per cent fall in annuity rates.

The ECON committee yesterday voted in favour of including the matching premium in their version of the Omnibus II directive’s text.

However, officials at the ABI are concerned restrictions in asset allocation put forward alongside the matching premium will limit the effectiveness of the proposals.

ABI director general Otto Thoreson (pictured) says: “The measures agreed in the ECON committee of the European Parliament are far from perfect but pave the way for a constructive discussion in the next phase of negotiations on Solvency II. We urge the finance ministers, the European Parliament and the European Commission to work together in the weeks to come to address the outstanding issues.

“It must remain possible for insurers to continue to deliver products with long term guarantees that are attractive to consumers. These are products that people rely on for their income in retirement.

“Linked to this is the ability of insurers to contribute across Europe to helping governments drive economic growth post the financial crisis, a challenge which we in the industry are keen to meet, if regulation allows.

“The final text must not constrain European insurers from competing successfully in the global market. The issue of equivalence must be resolved in order for the EU insurance industry to remain competitive and this will be an issue for which we, and our European counterparts, must seek a successful regulatory outcome.”


Patience has its rewards

Throughout 2011, we were bombarded with headlines such as Greek tragedy and Acropolis Now as the Greek debt crisis took centre stage. Investors took fright and many European funds saw net outflows. It has become an unloved, neglected sector. Although Greece is symbolic of the wider problem of a lack of economic and political cohesion […]

Agents warn clients after HSBC cuts conveyancers

Estate agents have started to alert mortgage borrowers over possible problems in using HSBC because of its recent decision to cut its conveyancing panel to just 42 firms, according to The Law Society. HSBC made the decision in January and although customers are free to choose their own solicitor, HSBC will still use a panel […]

‘Lack of state pension clarity will hit advice’

IFAs’ ability to give sound advice on auto-enrolment will be undermined if the Government does not clarify the future of the state pension, says the work and pensions select committee. In July, the Government set out plans for a flat-rate pension but it has not yet published detailed proposals. In January, Labour suggested the Treasury […]

The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm