Insurance Ireland, a representative body for insurance companies in Ireland, has published a reply to the European Commission consultation on the review of the Solvency II.
In July, the European Commission, an executive branch of the EU launched a public consultation on the review of the EU's prudential rules for insurance and reinsurance companies, known as the Solvency II Directive.
In its reply, Insurance Ireland called on the European Commission to present legislative proposals which strengthen the integration of the EU single market for insurance as well as regulatory and supervisory convergence.
Consistent application of the Solvency II framework will allow insurers to provide their services across the union, increasing consumer choice while ensuring the consistent protection of all EU citizens, according to Insurance Ireland.
It also explained that the provision of specialised and targeted solutions will enhance the functionality of the single market and allow insurers, particularly new market participants like insurtechs, to scale their businesses across the EU market of 440 million people rather than in Ireland, only.
Insurance Ireland argued that for the commission to enhance the EU single market, which is a single market for all 27 EU member states, for insurance, “it will be important that a common European approach is ensured for crucial elements of the framework, e.g. the proportionate application of Solvency II”.
It was also highlighted that processes on cross-border supervision need to be improved without risking the creation of additional burdens for the single market.
Insurance Ireland said that it made concrete proposals on both issues and hope that the commission will consider its input in its legislative proposal.
Although it noted that Solvency II is the most advanced supervisory regime worldwide, it also pointed out that it is “overly conservative and might lead to artificial volatility in its results”.
It said: “As a consequence, insurers hold an excessive amount of own funds which could be used to be invested or to provide additional cover to the market.”
The current COVID-19 pandemic is threatening global economies and the fight against climate change is increasingly important, according to Insurance Ireland.
Allowing insurers to provide their full investment capacity to contribute to the economic recovery, necessary (digital) infrastructures and sustainable projects is crucial, Insurance Ireland said.
It added: “Equally important is that insurers are able to provide the necessary cover to society and economy to support the recovery and provide consumers with the necessary peace of mind. The review of key calibrations of Solvency II is indispensable in this respect.”
Insurance Ireland also called on Irish regulators and supervisors to not diverge pro-actively such as the potential divergence with the current Central Bank of Ireland (CBI) consultation on recovery planning.
It stated that Ireland should not put an “extra burden on itself on its way to economic recovery and success by undermining its own competitiveness in an integrated single market for insurance in Europe”.
In the same reply, Insurance Ireland stated that it was disappointed with the commission limiting the potential input from stakeholders by only allowing for the elaboration and justification of answers if the “right box” was ticked in the multiple-choice questionnaire.
“Insurance Ireland chose to adjust itself to the limitation for some questions. Nonetheless, we consider this unnecessary restriction as a backdrop for the Commission to assess the full picture of the issues under consultation and a threat to better regulation standards,” it concluded.
At the start of 2020, Insurance Ireland appointed Moyagh Murdock as chief executive.
