Allow insurers to invest long-term without putting clients at risk

18.07.2023 12:16

Allow insurers to invest long-term without putting clients at risk

Unrecognizable man signing a contract while financial advisor is aiming at the place he need to sign

"With today’s vote, we will allow insurance companies to invest in the green transition without putting clients at risk. ‘Solvency II’ is the world’s gold standard for insurance regulation, but so far, its calibration has been overly conservative. As a result, European insurance companies are forced to hold hundreds of billions in excess capital. Now, we will enable European insurers to channel released capital into productive investments such as green infrastructure and digitalisation. If you want the Green Deal to succeed, you need private investments to do so", explained Markus Ferber MEP, the EPP Group’s Spokesman on Economic Affairs, after today's vote on the prudential rules for insurance and reinsurance undertakings (Solvency II) in the parliamentary committee.

These rules require insurance companies like Generali, Allianz or AXA to hold capital in relation to their risk profiles to guarantee that they have enough financial resources to withstand financial difficulties.

"Due to their long time horizons, insurance companies make for perfect long-term investors. The Solvency II review enables them to make more long-term investments, which will ultimately benefit policyholders", said Ferber who is Parliament's main negotiator of the law.

Among other proposals, the Solvency II review will also make insurance supervision more proportionate and better tailored to the actual risks. "Small insurance companies with a simple and safe business model will benefit from reduced administrative burdens. We are moving from one-size-fits-all solutions to more risk-based supervision", said Ferber.

Parliament wants to let investors and policyholders check an insurance company’s green credentials. "However, there is no room for a discount in capital requirements for green investments as demanded by many activists. After all, insurance regulation has to put financial stability first and cannot afford any conflicting objectives", Ferber concluded.

Note to editors

The EPP Group is the largest political group in the European Parliament with 177 Members from all EU Member States

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