The European Insurance and Occupational Pensions Authority (Eiopa) will “of course” be making some adjustments to its proposed reforms to Solvency II, according to chair Gabriel Bernardino.
Eiopa learnt a lot during the holistic impact assessment it conducted this year, which was extended to take account of data from the Covid-19 pandemic, he said at the Insurance Risk & Capital EMEA event on 2 December.
But he emphasised, “the big fundamental elements that we wanted to achieve with the review will continue to be the same”.
These elements include recalibrating Solvency II for the low interest rate environment, increasing the effectiveness of the long-term guarantee mechanisms and improving proportionality. Eiopa is also introducing tools to manage macroprudential risk, harmonised regimes for recovery and resolution, and insurance guarantee schemes.
“You have heard me say this a number of times: it's going to be an evolution, not a revolution. And that's the outcome that we will have at the end,” Bernardino said.
Eiopa is also planning to incorporate a mechanism to mitigate the impact from low interest rates. Bernardino did not reveal any further details, but said it would be “simple and predictable”.
Implementing any changes may take several years – not before 2023 or 2024 – because the discussions to reach a political agreement will take time. “If we are still within this extremely low interest rate environment, we will have a mechanism to dampen and to mitigate that,” he said.
Eiopa is due to publish its final view on Solvency II reforms later this month.
Bernardino was speaking on day one of InsuranceERM’s Insurance Risk & Capital EMEA event.
In a 30-minute interview, which you can watch below, he talked to editor Christopher Cundy about four topics:
- the Solvency II 2020 Review;
- economic recovery from Covid-19 and future public-private resilience schemes;
- Eiopa’s work on managing the risks from climate change; and
- the risks emerging from digitalisation.