General Information & Client Services
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
June 26, 2018

Valdis Dombrovskis, the Vice President of EC, spoke at the Insurance Europe conference on Solvency II. He highlighted that Solvency II is a world-leading regime for insurance and reinsurance and it needs to be regularly evaluated and updated. He focused on the two reviews of Solvency II: the one slated for this year involves the Delegated Regulation containing implementing rules while the one planned for 2020 involves a wider review of the Directive.

The EC Vice President discussed the importance of the insurance sector for the Capital Markets Union. In 2016 and 2017, the risk calibrations for infrastructure investments by insurers were adapted. Additionally, the revised risk calibrations for simple, transparent, and standardized securitizations in Solvency II will help insurers take part in the rejuvenation of securitization markets in Europe. He also mentioned that the EU member states reached a common position on the proposal for a Pan-European Personal Pensions Product (PEPP), which marks an important milestone in building the Capital Markets Union. Another important Capital Markets Union priority is sustainable finance. Rules are being established about disclosure and public information, which financial institutions (including insurers and insurance distributors) must give on their policies and practices in this area. The next step will be to propose the required changes to the Delegated Act on Insurance Distribution Directive. He stated, "....sustainable finance actions have just begun and we are looking at additional elements that relate to Solvency II."

While discussing the review of Solvency II, Mr. Dombrovskis mentioned the three themes of this year’s review of the delegated act, which involve improving proportionality in the way insurers calculate capital requirements, the removal of unintended technical inconsistencies, and  the removal of unintended barriers to investments in unlisted equity and privately placed debt. The work for the review is based on extensive input from EIOPA, which presented a thorough analysis of nearly 25 items. The EIOPA advice is being carefully analyzed, along with the impact assessment and the positions of stakeholders. A preliminary positive view has been taken on many of the items in the EIOPA advice. He stated, "On the risk margin, EIOPA's advice shows that the current level of the cost of capital is broadly appropriate. We will however take a hard look at the broader design of the risk margin in the context of the review of the Directive in 2020." Stakeholders criticized the own initiative advice of EIOPA, particularly stressing that the proposal on interest rate risk is controversial. It may be preferable to revisit this issue as part of the 2020 review. In this year's review of the Solvency II Delegated Regulation, more unlisted equity and unrated debt will be allowed to benefit from lower calibrations, based on robust qualification criteria. EC will continue the work on listed equity.

As Solvency II is a risk-based system, to lower the calibration, evidence will be needed that the risk level of investments in listed equity is lower than that the current one. "According to the EC's Better Regulation principles, we need an impact assessment for important legislative changes. We have seen claims that listed equities are typically held for a very long-term, but we need concrete evidence for that. That is why we have launched a study of the drivers of insurers' investments in equity, and the results should be available later this year," added the EC Vice President. He then discussed the 2020 review of the Directive. This was supposed to focus on the long-term guarantee measures, but it will be reviewed more broadly. That is why preparatory work is in hand and EIOPA is busy collecting data. The evidence and the advice will be carefully considered, along with all ideas presented to EC. He concluded that Solvency II has several important and interacting goals and it should maintain financial stability and protect consumers while allowing the insurance sector to invest and contribute to growth.

 

Related Link: Speech

Keywords: Europe, EU, Insurance, Solvency II, Reinsurance, Capital Markets Union, Proportionality, EIOPA, EC

Related Insights
News

IAIS Publishes Drafts of Revised ICP 8, ICP 15, ICP 16, and ICP 20

IAIS published the drafts of revised Insurance Core Principles on Public Disclosure (ICP 20), Investments (ICP 15), Enterprise Risk Management for Solvency Purposes (ICP 16), and Risk Management and Internal Controls (ICP 8), along with a revised draft of the glossary on enterprise risk management (ERM).

November 14, 2018 WebPage Regulatory News
News

MAS Amends Notice 637 on Capital Adequacy Requirements in Singapore

MAS published the final, revised Notice 637 on the risk-based capital adequacy requirements in Singapore.

November 13, 2018 WebPage Regulatory News
News

ESMA Updates Q&A on Implementation of CSD Regulation and MAR

ESMA updated questions and answers (Q&A) documents on the implementation of the Central Securities Depository (CSD) Regulation and Market Abuse Regulation (MAR).

November 12, 2018 WebPage Regulatory News
News

FSB Finalizes and Publishes the Cyber Lexicon

FSB published a cyber lexicon, following the public consultation earlier this year.

November 12, 2018 WebPage Regulatory News
News

SRB Updates Liability Data Reporting Template for 2019

SRB published version 2.7.1 of the Liability Data Reporting (LDR) Template.

November 12, 2018 WebPage Regulatory News
News

ECB to Conduct Comprehensive Assessment of Six Bulgarian Banks

ECB will undertake a comprehensive assessment of six Bulgarian banks. The exercise, comprising an asset quality review and a stress test, follows Bulgaria’s submission of a request to establish close cooperation with ECB on July 18, 2018.

November 12, 2018 WebPage Regulatory News
News

IMF Publishes Reports on the 2018 Article IV Consultation with Chile

IMF published its staff report and selected issues report under the 2018 Article IV consultation with Chile.

November 09, 2018 WebPage Regulatory News
News

PRA Issues PS27/18 on Implementing the Extension of SM&CR to Insurers

PRA published the policy statement PS27/18, which provides feedback to responses to the consultation paper CP20/18, on implementing the extension of the Senior Managers and Certification Regime (SM&CR) to insurers (Part 2).

November 09, 2018 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for November 2018

EBA published answers to seven questions under the Single Rulebook question and answer (Q&A) updates for this week.

November 09, 2018 WebPage Regulatory News
News

FED Finalizes the Large Financial Institution Rating System

FED finalized the new supervisory rating system for Large Financial Institutions (LFIs), to better align with the current supervisory programs and practices for these firms.

November 09, 2018 WebPage Regulatory News
RESULTS 1 - 10 OF 2204