Insurance Europe, the federation representing national insurance associations across 39 European countries, has cautioned that the European Commission’s draft Level 2 measures for Solvency II fall well short of political commitments made by EU lawmakers, jeopardising growth and putting billions in potential long-term investment at risk.
In its consultation response, Insurance Europe underlined the industry’s ongoing support for a regulatory framework that safeguards policyholders and ensures financial stability.
At the same time, the federation argued that the Commission’s technical proposals fail to match the level of ambition set by the European Parliament, the Council and the Commission itself, meaning the reform is unlikely to deliver on promises of boosting European competitiveness or unlocking capital for sustainable investment.
Insurance Europe said the draft rules do not properly address artificial volatility, with an incorrectly calibrated Volatility Adjustment and a restrictive new model for long-term interest rates making insurers’ balance sheets excessively exposed to short-term market swings.
The federation also argued that the Commission’s stance on long-term equity remains too limiting, preventing the release of capital that could be directed toward productive, long-term projects.
While Insurance Europe welcomed proposed reductions to the risk margin, it stressed that the revisions are still out of step with international approaches and could leave European insurers disadvantaged compared with global peers.
The federation further warned that instead of reducing bureaucracy, the proposals introduce fresh layers of complexity and operational demands. Insurance Europe said this undermines the principle of proportionality and adds compliance costs, running counter to earlier commitments to streamline Solvency II.
Solvency II is the EU’s regulatory framework for insurance, aimed at protecting policyholders, preserving financial stability and maintaining a resilient sector. The Level 1 legislation, agreed last year by the European Parliament and Council, set the legal foundations.
The Level 2 measures now being drafted by the Commission establish the technical details needed for implementation. Insurance Europe stressed that unless the Commission’s proposals are strengthened, the EU risks missing a key opportunity to align regulation with its wider objectives of competitiveness and long-term growth.
Angus Scorgie, Head of Prudential Regulation at Insurance Europe, commented: “After many years of discussion, now is the time for the Solvency II review to deliver on its promise: combining protection for policyholders and financial stability with growth and resilience for Europe’s economy and less red tape for insurers.
“The Commission’s technical proposals do not live up to the ambitions of last year’s political agreement on the changes needed. Without improvements to the draft proposals, the review will fall short on strengthening European insurers’ contribution to the financing of the EU’s priorities of competitiveness and growth.”
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