The European Commission has published for consultation its draft delegated act amending Solvency II.
As previously revealed by InsuranceERM, the amendments stick closely to proposals from the European Insurance and Occupational Pensions Authority (Eiopa), but ignore Eiopa’s suggestions to reformulate the calculation of interest rate risk.
The Commission has also ignored calls from the industry to reform the calculation of the risk margin, in particular a lowering of the assumption around the cost of capital.
Insurers gave a lukewarm reception to Eiopa's proposals and are unlikely to be heartened by the Commission's draft act.
The changes do go some way to reducing the complexity and cost of complying with Solvency II, particularly for smaller insurers. Other changes should ease the process of investing in certain asset classes, for example regional and local government debt, and unrated debt. The Commission has also proposed creating a special asset class for long-term equity investments that would attract a capital charge of 22%, consistent with the charge for strategic equity investments.
The consultation is open until 7 December.
The Commission will adopt the act following the consultation period, and if the Parliament and Council do not object within two months, the delegated act will enter into force.