The proposals feature a major inconsistency with respect to addressing systemic risk. On the one hand, they recognise the systemic nature of the sector by introducing, in a most welcome move, a directive establishing a framework for the recovery and resolution of insurance and reinsurance companies. At the same time, they fail to impactfully address the insurance industry’s climate-change related risks, which pose a major threat to financial stability. The proposals also lack ambition regarding macroprudential tools in the insurance sector.
Regulation(s) covered in this publication
- Solvency II
On 10 January 2022, Finance Watch published its response to the European Commission’s consultation on the review of the insurance sector’s prudential regulation (Solvency II Directive).