Capital Markets Union: New rules to help insurers make long-term investments come into force


New rules under Solvency II, the EU’s directive regulating the activities of insurance companies, are published today that will make it easier for insurers to provide financing to companies, including small and medium enterprises (SMEs). The current level of capital requirements makes it costly for insurers to finance SMEs, in particular in the case of long-term equity investments and private debt. Insurers providing finance via such instruments will now be able to benefit from lower capital requirements, which should help mobilise private sector investment – a key objective of the Capital Markets Union. The delegated regulation, published in the Official Journal of the European Union, also introduces simplifications for the calculation of capital requirements by insurance companies, as well as alignments between rules for the banking and the insurance sector. This will reduce the regulatory burden for insurers without jeopardising the safety of the sector. Further revisions of technical nature in the delegated regulation ensure that the rules remain fit for purpose. A more fundamental review of Solvency II is due by the end of 2020. Preparatory work for that review is already ongoing. In line with the objectives of the CMU, further analysis on remaining obstacles to investments in the real economy will be undertaken.