Europe reviews insurance rules for investment in pandemic recovery and green deal
We missed some important news back in September, when the European Commission announced a comprehensive ‘review package’ of Solvency II rules. Introduced following the global financial crisis of 2007–8 and coming into effect in 2016, Solvency II is a risk-based, pan-European prudential framework for insurance firms, with reporting requirements laid out in its ‘Pillar 3.’
With a new crisis to recover from – that of the Covid-19 pandemic – the policy goal of the amendments is to ensure that insurers and reinsurers in the EU remain safe and resilient, but also that they keep investing. In particular, Europe is moving to encourage insurers to help finance the post-Covid recovery, complete the capital markets union, and channel funds to implement the European green deal. The review also fills gaps in the current rules, and seeks to make the insurance and reinsurance sector more resilient.
The Commission notes that “the review package does not represent a complete overhaul of the current rules, but rather makes targeted adjustments.” Nonetheless, it introduces a number of important and detailed changes, including to disclosure requirements.