June 18, 2019

EC published the Delegated Regulation (EU) 2019/981 that amends the Regulation (EU) 2015/35, which supplements Solvency II Directive (2009/138/EC) on the taking-up and pursuit of the business of insurance and reinsurance. These new rules under Solvency II will make it easier for insurers to provide financing to companies, including small and medium enterprises (SMEs). Regulation (EU) 2019/981 shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union. Points (50), (59) to (61), (66) and (74) of Article 1 of Regulation (EU) 2019/981 shall apply from January 01, 2020.

The current level of capital requirements makes it costly for insurers to finance SMEs, particularly in the case of long-term equity investments and private debt. Insurers providing finance via such instruments, which should help mobilize private-sector investment, is a key objective of the Capital Markets Union. Regulation (EU) 2019/981 introduces simplifications for the calculation of capital requirements by insurance companies as well as alignments between rules for banking and the insurance sector. This will reduce the regulatory burden for insurers without jeopardizing the safety of the sector. Further revisions of technical nature in the delegated regulation ensure that the rules remain fit for purpose. A more fundamental review of Solvency II is due by the end of 2020. Preparatory work for that review is ongoing. In line with the objectives of the Capital Markets Union, further analysis on remaining obstacles to investments in the real economy will be undertaken.

 

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Effective Date: July 08, 2019

Keywords: Europe, EU, Insurance, Securities, Solvency II, Capital Requirements, Capital Markets Union, Regulation 2019/981, Regulation 2015/35, SCR, EC

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