Finance Watch emphasises the need to preserve Solvency II as a risk-based framework that protects policyholders and underpins financial stability. Weakening capital requirements risks undermining both the credibility of the regime and its resilience in times of crisis.
The response highlights three priorities:
- Sustainability risks: Amendments must fully integrate climate risks, including EIOPA’s recommendations to better capture the risks of fossil fuel exposures.
- Securitisation: Cutting requirements for insurers’ securitisation exposures is unjustified. Insurers’ liability-driven business models make them particularly vulnerable to the complexity and illiquidity of these assets, and there is little evidence securitisation supports real economy lending.
- Policy alternatives: A more constructive path would be to develop the market for catastrophe bonds, helping insurers provide cover against extreme weather and narrowing Europe’s climate protection gap.
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