The Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE) has revealed that it's disappointed in European Insurance and Occupational Pensions Authority EIOPA’s advice to the European Commission on the Solvency II Review. AMICE suggested that EIOPA’s opinion represents an increasingly conservative approach to insurance risk, which ultimately will negatively impact policyholders. Recently, EIOPA submitted its opinion on Solvency II Review to the EC. The Solvency II framework is “working well and no fundamental changes are needed at this point in time”, according to EIOPA, but it has said a number of adjustments are required to ensure that the regulatory framework continues as a well-functioning risk-based regime. AMICE stated: “Solvency II has proven to be a robust tool since its full commencement in 2016; this review is an opportunity to improve certain aspects of the regulatory infrastructure, ultimately with the aims of ensuring financial stability and to benefit policyholders.” The association also outlined that it’s concerned that the advice from EIOPA does not reflect several proposed improvements to Solvency II which have been examined and developed in detail to create a better equilibrium in the regime. AMICE explained: “Ultimately, this could mean that insurers will be limited in their offerings to policyholders and their ability to invest, particularly in the long-term which is a key focus for mutual and cooperative insurers.” Concerns remain that the principle of proportionality is still not fully tackled within the advice, according to AMICE. It said: “Proportionality is a key aspect of the regulatory infrastructure, which should reflect the nature, scale and complexity of the insurance entity when applying regulatory requirements.” Commenting on its disappointment, AMICE’s secretary general Sarah Goddard, said: “While we are still assessing the advice from EIOPA to the European Commission, there are several important areas which we believe still need to be tackled.” Goddard explained: “The experience of the COVID-19 pandemic within the insurance sector has demonstrated the resilience of the industry, so it is counterintuitive that increases in solvency burdens would benefit policyholders. Indeed, we believe that these requirements would ultimately limit product choice and increase costs.” “We are particularly concerned that we are still not seeing a clear and structured approach to proportionality. We believe that shortcomings in applying proportionality will be highly detrimental to the SME sector in particular, but will have a wider effect, ultimately reducing competition and choice for the consumer,” she added.
