Barnier warned over Solvency II

Insurers have warned EU internal markets commissioner Michel Barnier that failure to properly implement the Solvency II directive will have “dire consequences” for Europe’s insurance industry.

The chairmen and presidents of four pan-European insurance bodies have written to Barnier expressing their concern that the European Commission's draft Solvency II framework is underpinned by an “overly conservative approach” to investment.

It warns that the current framework could reduce the availability and affordability of insurance products.

The letter concludes: “Stakes are high and time is running out: a failure to properly implement this reform would have dire consequences for an industry that represents a significant component of the EU economy, capital markets, old age savings and jobs.

The letter was signed by the chairmen and presidents of the Pan European Insurance Forum (PEIF), the CEA (European insurance and reinsurance federation), the Chief Financial Officers Forum and the Chief Risk Officers Forum.

ABI director of financial regulation and taxation Peter Vipond echoed the concerns outlined in the letter.

He said: “It has now been 10 years since the principles of Solvency II were proposed. Yet we have still to agree the rules. This is bad news for all. For regulators and firms, it makes a proposed start date of January 2013 difficult. For insurers the current draft of the rules are poorly thought through in places, leading to them holding unnecessarily high levels of capital, ultimately penalising consumers.

“This joint letter signals both the industry's concern but also its determination to work with regulators to finalise the rules quickly and make them work for a long time.”