Summary
OVERVIEW
The good news is that there are signs from behind the closed doors in the Commission working group that the European Commission is beginning to take a large scythe to the unreasonable capital requirements proposed by our regulators in CEIOPS. The CEA’s publication Why excessive capital requirements harm consumers, insurers and the economy got some good press coverage, helped by timely interventions from insurance buyer groups. There is of course a long way to go, and these gains will need to be defended. But credit where it is due to some relentless technical work over a long period of time.
Good news also, of the “glass half full” kind, in that the Commission did renew the insurance block exemption from competition law. This is very much against the run of play, as the Commission are in the business of removing block exemptions, and recognises the special characteristics of insurance. This said, the removal of protection from co-operation on security devices and standard policy conditions may well prove expensive in unnecessary legal fees.
Looking forward, it remains the case that insurers face a huge volume of regulatory change, in both retail and wholesale issues, and affecting both sides of the balance sheet. The G20 conclusions on the financial crisis are driving change at international, EU and UK level. It is regrettable that interpretation of the G20 conclusions seems to differ so greatly. It is equally regrettable that regulators have read with great care the section of the G20 conclusions about tightening regulatory requirements, but failed to master the section on the need for economic growth.
The lessons from such successes as we have had on Solvency II and the block exemption are that we need to continue putting in measured arguments, at both technical and political level.