Government has a social duty to help insurers fight the rules
City minister Lord Myners told the Association of British Insurers (ABI) that the government had "a social duty" to help insurers fight over-tough European solvency rules, the FT reports.
"Capital must be sufficient to provide security and assurance, but setting capital at an excessively conservative level will have very real consequences in terms of disincentivising retirement provision and adversely impacting pensioner income," Lord Myners said.
"We must be crystal clear that the risk here is increased costs for pension businesses, and ultimately pensioners. We absolutely cannot allow this to happen. Government is committed to ensuring that these regulatory reforms do not unintentionally impact the lives and well-being of pensioners in the UK and elsewhere in Europe."
Excessively conservative
The Telegraph said Lord Myners had attacked the rules as "excessively conservative".
Tim Breedon, chief executive of Legal & General welcomed "Lord Myners' effort and commitment to achieving the right result in Europe for UK savers and pensioners, and for the industry, on Solvency II.
"The direction of travel is now more positive . . . but sustained effort will still be required to build a pan-European consensus on capital issues, therefore ensuring future pensioners are not disadvantaged," he said.
Peter Vipond, director of financial regulation at the ABI, said: "[We] are pleased with his promise that he will work tirelessly to ensure Solvency II is reformed to enhance the strength of the UK industry.”
CEIOPS must go further
In a separate analysis the FT claimed insurers and reinsurers were worried the European regulators’ group CEIOPS had not watered down proposals far enough.
Denis Kessler, chief executive of French reinsurer Scor, said: "This will not improve solvency but cut profitability, We need to tell governments to tell their people that Solvency II means a 20-30% increase in their general insurance rates."
Charles Garnsworthy, partner at PwC, said: "There are still a number of areas which have not been addressed in the final advice and are likely to be of concern to the industry."
Analysts at Credit Suisse believe that the latest documents are still proposing "increased capital requirements from pretty much every direction" and that, on average, the impact will be an increase in capital requirements of 50% from the last impact study, carried out in 2008.
