ABI warns against excessive capital requirements

The Association of British Insurers has reiterated its warning about the potential costs to insurers of onerous capital requirements under the European Commission’s Solvency II directive.

The comments follow the launch of the latest consultation period for the fifth Solvency II quantitative impact study (QIS) on July 4.

“We agree on the need to test capital requirements for Solvency II, but the ABI has already made it clear that the directive should not be used to force insurers to hold excessive capital, as this would ultimately lead to higher costs and less choice for customers,” said Kerrie Kelly, director general of the ABI. “Imposing retrospective rules on products, such as annuities, would also lead to higher costs for consumers. The Directive must therefore have appropriate transitional arrangements."

She added: "We will continue to engage with European officials as the directive is finalised and to encourage our members to take part in the study.”

Solvency II is due to come into force on January 1 2013. The QIS 5 consultation will run from August to November.