The CEA, the European re/insurance federation, has reiterated its support for the EU’s new Solvency II regulatory regime but called for more work to be done on the Level 2 measures that will put the flesh on the bones of the Framework Directive. It also called for changes to the draft specifications for the fifth Quantitative Impact Study (QIS 5) that will be carried out later this year to test the likely effects of Solvency II on the insurance industry.
Speaking in Brussels at the European Commission’s public hearing on the Level 2 implementing measures, the CEA’s director general, Michaela Koller, said: ‘Although we welcome the modifications that the European Commission has already made to the implementing measures and the QIS 5 specifications, the proposed measures are still too conservative in many areas and much work remains to be done before they truly reflect the economic, risk-based principles that form the basis of the Framework Directive.
‘The fifth impact study is a vital element in the development of the new regulatory regime,’ said Koller. ‘To achieve the level of industry participation in the exercise that the EC is seeking, and to ensure that it is an effective test of whether Solvency II is fit for purpose, it is vital that the specifications include appropriate solutions to outstanding issues.’
At the hearing, Koller warned of the dangers of imposing overly conservative capital requirements on the insurance industry through the implementing measures. ‘Excessive capital requirements would have unnecessary and harmful consequences for the insurance industry, for the economy and for society,’ she said.
‘The economic crisis cannot be used as justification for imposing excessive capital requirements on an industry that not only did not cause the crisis but also that withstood it well,’ said Koller. She put this in the context of a worrying trend to regulate all financial services sectors in the same manner, failing to recognise the differences between the business models of the different sectors.