NBFI consultation: insurers argue against need for more EU regulation

The insurance industry has responded to a European Commission consultation on the adequacy of macroprudential policies for the non-bank financial intermediation (NBFI) sector. In its response, Insurance Europe explains that there is limited risk posed by the insurance sector, and argues that existing regulation is sufficient.

In its response, Insurance Europe stresses that:

• the NBFI categorisation and terminology is unhelpful and unconducive to policymaking;
• the European insurance sector is already well-regulated and supervised;
• with the Solvency II review, the macroprudential framework for the European insurance industry has been strengthened further, introducing new macroprudential requirements for insurers and new macroprudential powers for supervisors;
• the insurance sector is also subject to extensive macroprudential oversight through the International Association of Insurance Supervisors
• Holistic Framework, with data contributions from both individual insurers and supervisors; and
• liquidity risk in the insurance sector is well-managed and well-supervised and is in any case rarely problematic due to the unique features of the insurance business model.

In its response it also refers to a stress-testing exercise carried out by the European Insurance and Occupational Pensions Authority (EIOPA) in 2021 which demonstrated that liquidity risk is not a significant issue in the European insurance industry.

It further notes that there is limited systemic risk emanating from the insurance sector because of the specific insurance business model and the extensive regulatory and supervisory system already established. Therefore, it argues that the European Commission's work on NBFIs should refrain from creating more regulation for insurers.