Brussels, 17/06/2013 (Agence Europe) - EU Single Market Commissioner Michel Barnier wants the European Parliament and Council of Ministers to reach final agreement as soon as possible on new EU insurance rules following the publication on Friday 14 June of a report by the European Insurance and Occupational Pensions Authority (EIOPA) on long-term investment issues.
Barnier commented: “The Commission trusts that the Council and Parliament will use this very good report and its findings as a basis for an urgent agreement on Omnibus II and show pragmatism and willingness to compromise. The insurance sector needs Solvency II to be applied as soon as possible, since the existing Solvency I regime is outdated and provides insufficient security, and the long-term guarantee package is the only major remaining hurdle”.
EIOPA has tested the measures in Solvency II that would allow life-insurance companies to continue to provide long-term investment products, measures that will be incorporated in the Omnibus II implementation package, currently blocked, awaiting feedback from EIOPA. Recognising the need for counter-cyclical corrections, EIOPA agrees with four measures (extrapolation of the long-term interest rate, a matching adjustment, an extended version of the matching adjustment and a countercyclical premium) and introduces a new measure (a “volatility balancer”). The Commission hopes that EIOPA's report and a special report from the Commission to be published shortly will form the basis of an agreement on Omnibus II in the autumn.
Sven Giegold (Greens/EFA, Germany) admits that measures are needed to avoid temporary financial markets distortions, particularly on sovereign bond markets, but “such measures should not grant permanent capital relief that could disguise unrecoverable losses or the risk of under-provisioning in the face of continued low interest rates and economic growth”. He says EIOPA should publish details of the member states' insurance markets as its report indicates that the combined measures would have provided relief to the industry in 2011 of the order of €200 billion. Criticising the fact that the debate has been led by the industry of certain countries (Spain, Italy, Portugal and the United Kingdom) and that consumer representatives have not been involved, he says that “the risk of regulatory capture, often raised by the regulators themselves, should be discussed in the framework of the review of the ESAs” (European Supervision Authorities). (MB/transl.fl)