Insurance Europe Response to EIOPA Consultations on Solvency II

This from Insurance Europe as the EU grapples with the issue of having billions set aside in Solvency II schemes;

Insurance Europe has responded to several consultations by the European Insurance and Occupational Pension’s Authority (EIOPA) as part of the technical discussions – so called level 2 – Solvency II review.

1/ Response to EIOPA’s consultation paper on liquidity risk management plans

In its response, the industry supports the development of company specific liquidity risk management plans (LRMPs) that are proportionate and flexible to meet the differing approaches in the industry. There is limited value, Insurance Europe argues, in prescribing a common approach to liquidity risk management which could actually result in increased systemic risks, contrary to the intended outcome. Insurance Europe would support a review of additional requirements in line with the European Commission objective to reduce the operational burden to avoid duplication and unnecessary burdens.

2/ Response to EIOPA’s consultation paper on the criteria for the identification of exceptional sector-wide shocks

Due to the sector’s resilience and existing supervisory powers, in its response Insurance Europe rejects the need to introduce further supervisory powers to restrict insurers’ distributions for macroprudential purposes. The industry calls for a restrictive and well-defined approach to identifying exceptional sector-wide shocks to avoid inconsistent application across Member States, unnecessary costs, and counterproductive impacts on systemic risk, competitiveness, and the ability to raise capital.

3/ Response to EIOPA consultation paper on criteria for selecting insurers to run macroprudential analyses

The industry agrees that macroprudential factors, such as interest rates and economic cycles, are potential sources of risks to the insurance sector and should be considered in Own Risk and Solvency Assessment (ORSA) and for the Prudent Person Principle (PPP) as appropriate. However, it argues in its response, for most insurers, the additional requirements proposed will add very little in further identifying or mitigating systemic risk, and therefore, the application of these additional requirements should remain limited to very exceptional cases.