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Insurance Europe aisbl - Rue Montoyer 51 B-1000 Brussels - Belgium
  • Response provided to HLA consultation

    Insurance Europe responded to an International Association of Insurance Supervisors (IAIS) consultation on the higher loss absorbency (HLA) for global systemically important insurers (G-SIIs).

    In its response Insurance Europe demanded that the HLA should, in line with earlier communications from the IAIS and the Financial Stability Board (FSB), focus on systemically relevant activities and not penalize traditional insurance.

    Insurance Europe said that an assessment of the impact of the HLA framework is difficult given the related policy areas that are still subject to change or clarification. It also said that the fundamental design of the HLA should be reviewed once the other policy aspects are completed.

    Insurance Europe also raised concerns about the inappropriate link between size and level of HLA penalty.

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    25 Aug 2015
    International affairs & reinsurance
  • Insurers on track with Solvency II implementation

    Europe’s insurers are making significant progress towards implementing Solvency II by the end of this year. However, many are extremely concerned about the pressure which insurers face due to additional last minute requirements that are being imposed in the run-up to the regime coming into force, according to a survey conducted by Insurance Europe.
     
    The survey, which covered companies that account for 90% of European insurance premiums, found that a clear majority of firms were making good progress in implementing the first two pillars of Solvency II. It also revealed that the majority of insurers feel that risk management and governance have already been improved as a result of the introduction of the new regime.
     
    However, many respondents were concerned that the final version of the Quantitative Reporting Templates (QRTs), which insurers need to comply with the third pillar of Solvency II, will only be adopted by the European Commission in September this year, just four months ahead of when the new regime comes into force.
     
    Igotz Aubin, head of prudential regulation at Insurance Europe, commented: “It is extremely encouraging to see that Europe’s insurers have made such substantial progress in their journey towards implementing Solvency II, especially given that this task has been completed during a particularly challenging time for the industry. However, this survey has also revealed a number of serious issues that need to be acknowledged.” 

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    24 Aug 2015
    Regulation & supervision
  • Response provided to PRIIPs technical discussion paper

    Insurance Europe outlined a number of concerns in its response to the European Supervisory Authorities’ (ESAs) technical discussion paper on packaged retail and insurance-based investment products (PRIIPs).
     
    In its response, Insurance Europe emphasised that it is not appropriate to include the biometric risk premium (fair value) in the cost section of the key information document (KID). It pointed out that premiums for protection against biometric risks are not costs because the retail investor receives insurance benefits for these payments.
     
    Insurance Europe is of the opinion that reduction in yield (RIY) should be used as a cost indicator. In Insurance Europe’s view, RIY is more suitable than the total cost ratio (TCR), since it can capture the costs of life insurance products appropriately.
     
    Insurance Europe believes that the “what-if prescribed approach” with defined scenarios is valid and meaningful for PRIIPs. It said that high-level general principles should be set up at EU level, while fine-tuning or detailing of the assumptions to be used should be developed at a national level.
     
    Insurance Europe also stressed the need for the KID to be provided at the pre-contractual stage and, therefore, not be a personalised document. It is, therefore, not appropriate to consider several KIDs dependent on the “age of the customer and other parameters”. Risk assessments for life insurance products take into account a large number of factors and criteria. Differentiation according to all the other factors would be unfeasible. This would also lead to insurers providing retail investors with an overload of KIDs.

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    18 Aug 2015
    Conduct of business
  • Response to Commission consultation on the review of EMIR

    Insurance Europe has responded to a European Commission consultation on the review of the European Market Infrastructure Regulation (EMIR).

    In its response, Insurance Europe indicated that there are not sufficient possibilities for long-term investors, such as insurers and pension scheme arrangements, to transfer non-cash collateral with central counterparties (CCPs). Therefore, Insurance Europe believes that there are two possible solutions to address the concern of cash:

    • The Commission should consider a permanent exemption from the central clearing obligation for both pension funds and insurance companies that use derivatives for hedging.
    • The Commission should also encourage CCPs to develop tailored solutions for both pension funds and insurance companies, allowing for non-cash collateral as variation margin.

    Insurance Europe also said that the obligation for dual-sided reporting (DSR) should be removed and replaced by a requirement for one-sided reporting.

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    17 Aug 2015
  • Response provided to EIOPA consultation on review of infrastructure in Solvency II

    Insurance Europe has responded to a European Insurance and Occupational Pensions Authority (EIOPA) consultation on its advice to the European Commission on the identification and recalibration of infrastructure risk categories in Solvency II.

    In its response, Insurance Europe said that the EIOPA advice does not go far enough in order to remove impediments in infrastructure investments. It also said that the set of identification criteria put forward in the advice is too restrictive and causes significant burden for insurers that need to verify compliance with the criteria.
     
    Insurance Europe pointed out that EIOPA’s proposal still overstates the risk of investments in both infrastructure equity and debt, and fails to allow for any diversification benefit that these investments bring to an insurer’s investment portfolio.
     
    It also said that EIOPA’s advice relies too much on the availability of ratings from authorized agencies, and that insurers should be allowed to use other means for the credit assessment of infrastructure, eg internal ratings.
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    10 Aug 2015