RiskTech Forum

Insurance firms welcome EIOPA’s Solvency II evaluation

Posted: 24 October 2012  |  Source: FINCAD

Insurance companies in the European Union (EU) are welcoming a review of the Solvency II requirements that will be conducted by the European Insurance and Occupational Pensions Authority (EIOPA).

The European Commission (EC) has tasked EIOPA with reviewing Solvency II to figure out if its methodologies for calculation provide market participants with reduced incentive to invest in long-term assets like infrastructure projects, according to Insurance Risk.

EC members are concerned that the current methods for calculations would hamper the investment projects that insurers make in the real economy, the media outlet reports. The analysis provided by EIOPA will center around how the Solvency II regulations treat the financing of projects using both debt and equity.

The capital requirements that exist in Solvency II increase the costs associated with owning long-term infrastructure bonds, according to the news source. Insurer Legal & General has stated that the existing calculation methodologies are discouraging market participants from investing in infrastructure projects.

In addition to questions made about its impact on finance matters such as infrastructure, Solvency II has been pushed back multiple times as votes on the underlying regulatory regime Omnibus II have been delayed repeatedly.