Solvency II review should reduce barriers to business
Excessive conservativeness is hindering insurers’ ability to assist Europe’s transition to a sustainable economy and to provide the long-term products their clients demand, Insurance Europe president and CEO and chair of UNIQA Insurance Group, Andreas Brandstetter, said today (Wednesday January 29).
Speaking at a conference organised by the European Commission on the 2020 review of Solvency II, Brandstetter said: "Solvency II is good, but it is not perfect, and the 2020 review is the right opportunity to improve it. However, we definitely don’t need to revolutionise the framework, or to develop solutions to problems that do not exist.
“To be blunt, it is very difficult to see why one of the world’s most prudent and conservative prudential regimes needs prudential enhancements. What Solvency II needs today is a targeted and focused review, in three areas: reducing barriers to long-term business and investment, making proportionality work in practice and reducing the burden of reporting."
Other issues covered by Brandstetter include fixing issues with how Solvency II treats insurers’ long-term business; the growing understanding that the risks of long-term investment and long-term guarantees are lower than Solvency II currently assumes; and the need to make proportionality a practical reality rather than a theoretical principle.
Brandstetter said that proportionality is an important overarching principle included to avoid unnecessary costs which ultimately customers pay for. Today, very little proportionality is applied in practice. He said this must be addressed so that the framework really works for all entities to reduce costs and preserve a diversified and competitive European market, for the benefit of consumers.
He also said that meaningful reductions must be made to the regulatory reporting burden to streamline and simplify reporting requirements.
He concluded: "Europe has been set on an ambitious path towards a sustainable future, and the insurance industry can and should be a key contributor. We have the ability to support Europe’s goals, and play a key role in the transition to a sustainable economy. We can only do this to our full potential if we get Solvency II right."
