The European Insurance and Occupational Pensions Authority (EIOPA) invites market participants and (re)insurance stakeholders to provide their feedback on its “Discussion Paper on Standard Formula Design and Calibration for Certain Long-Term Investments”.
The European Commission (EC) requested EIOPA to examine whether the calibration and design of regulatory capital requirements for insurers’ long-term investments in certain asset classes under the envisaged Solvency II regime necessitates any adjustment or reduction under the current economic conditions without jeopardising the prudential nature of the regime.
EIOPA has already carried out an in-depth analysis of some of the asset classes explicitly listed in the EC letter. The Discussion Paper summarises EIOPA’s preliminary findings and contains specific questions to stakeholders.
The Discussion Paper provides all the interested parties with an opportunity to inform EIOPA’s further technical work, in particular in relation to data limitations. The insights gathered in this way will help EIOPA to produce a well-informed recommendation on the review of the design and calibration of the standard formula in relation to the asset classes considered. EIOPA will also look at the influence that the maturity of insurance liabilities has on regulatory capital requirements for long-term investments. Last but not least EIOPA will analyse non-regulatory obstacles for long-term investments by insurers.
The further research by EIOPA on long-term investments should lead to a final report early July. This enables EIOPA to take full account of the results of the Long-Term Guarantee Impact Assessment scheduled for the end of June. Combining the results of these two important work streams allows a full examination whether the regulatory framework of Solvency II should be amended to facilitate long-term investments.
The period for providing comments will end on Tuesday, 28 May 2013.
The Discussion Paper can be accessed from the EIOPA website: https://eiopa.europa.eu/consultations/consultation-papers/index.html
