Insurance Europe

Insurance is a cornerstone of modern life. Without insurance, many aspects of today’s society and economy could not function. The insurance industry provides the cover for economic, climatic, technological, political and demographic risks that enables individuals to go about their daily life and companies to operate, innovate and develop.

Despite this, the way insurance functions and its value are not always well understood. This booklet explains how insurance works, the value it provides and the importance of the regulatory environment in maximising the benefits that insurance can offer.

We live in challenging times. Europe faces significant economic headwinds, demands on strained public finances are higher than ever and the impact of natural catastrophes is rising.

Faced with such uncertainty, policymakers are seeking answers to difficult questions:

• With more people entering retirement than ever before, how can they provide for their old-age, without increasing the strain on already stretched public finances?
• Where will Europe find the investment it needs to create and support jobs, and economic growth?
• How can we better protect our society against unexpected and extreme events?

While these questions often require complicated answers, the end result boils down to the everyday lives and businesses of people like Maxine and her family. Read more about it in our booklet.

Insurance is a unique financial service, without which many aspects of modern societies and economies simply could not function. And due to its special features, the insurance industry requires a tailored regulatory approach that reflects its business model.

This booklet sets out four essentials:

• The freedom to underwrite — Standardising policies or introducing compulsory schemes can have a negative effect on the cost and availability of policies. Insurers must be able to develop products that meet their customers’ expectations, fit their risk profiles and meet legal and fiscal national requirements.
• Tailored prudential regulation — The regulatory framework needs to reflect the fact that insurers usually have stable, up-front and long-term funding and low exposure to liquidity risk and market volatility.
• Regulation that reflects unique distribution and varying consumer needs — Insurance products are distributed completely differently to investment products. Regulation needs to reflect this or it could lead to fewer points of sale and less consumer choice.
• Flexibility to present products and costs in a comprehensive way — The EU’s PRIIPs Regulation that governs disclosures for insurance-based investment products fails to capture the key features of insurance products and as a result misrepresent certain information that is important to retail investors.