European insurers have hit out at the way the Solvency II Directive is being implemented, saying that it could have major repercussions on the sector. Tommy Persson, president of European insurance federation CEA, said, on 11 March, “The insurance industry has serious concerns about the effect of some of the current proposals, as they would be bad for consumers, bad for Europe’s economy and bad for the insurance industry”.

The Council and Parliament adopted the framework directive last April after two years of infighting, but the CEA has accused a decisive Commission advisory committee charged with laying down the detail of the directive of rowing back on the original agreement. The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS), responsible for drawing up the so-called ‘level 2’ implementing measures in the Lamfalussy process, is recommending excessively “prudent” capital requirements on insurers that will lead to substantially higher costs, the federation says. In a report accompanying the statement, the group estimates the capital costs could lower returns for insurers by around 1-2%, which could mean savers having to shell out an extra 50% per year to get the same amount of money out of their policy at retirement.

AMICE, the group representing smaller insurers, also took issue with the excessive capital requirements. “The calibrations as currently proposed by CEIOPS do not give consumers the best deal […] the suggested capital requirements, together with costly obligations in the areas of organisational structure, disclosure and reporting, could see the prices of insurance products rise considerably, at the same time reducing payouts,” the group says in a statement.