Stability Threatened by Proposed Commission Regulations under Solvency II
The European Insurance and Occupational Pensions Authority (EIOPA) has voiced its criticisms towards the planned delegated Solvency II regulation, particularly the method for determining long-term interest rates. In a recent statement, EIOPA called for an increase in the safety buffer for the long-term stability of interest rate liabilities.
Jรถrg Asmussen, CEO of the GDV (German Insurance Association), has shared similar concerns. According to Asmussen, life insurers often guarantee interest rates over several decades, making a stable method for valuing these commitments crucial.
The GDV has also criticized the one percent safety buffer for determining the First Smoothing Point (FSP). The association believes that this buffer is inadequate and that significant improvement is needed, especially for smaller insurers.
In addition, the GDV expects new requirements to be added, such as the publication of additional sensitivity analyses. These additional requirements, as per the GDV, will further complicate and make difficult-to-understand the Solvency and Financial Condition Reports.
The Commission's planned method for deriving long-term interest rates has also come under fire from the GDV. The association believes that the method is problematic and requires reconsideration.
The requirement that companies must "withstand all current or future risks" is another point of contention for the GDV. The association argues that this requirement, with its broad formulation and practical unprovability, is impractical and unrealistic.
The SchadenBusiness Regulation, which indicates that insurers are robustly positioned for 2024, paints a more positive picture. However, the SchadenBusiness Politics and Insurance discussion focused on the major challenges ahead for Germany and Europe.
In practice, only very few companies benefit from the SNCU regulations. The criteria for these regulations, as per the GDV, are too restrictive, and there is a need for significant improvement in the planned easing for smaller insurers.
After adoption, the delegated regulation must still be reviewed by member states and the European Parliament. Once this process is complete, the regulation will enter into force after publication in the Official Journal.
The SchadenBusiness Insurance Day highlighted Germany's bureaucracy burnout, with the insurance industry being no exception. The GDV emphasizes the importance of a simplified and streamlined regulatory environment to ensure the long-term stability and prosperity of the industry.
