The European Insurance and Occupational Pensions Authority (EIOPA) today published a report on the impact of various model approaches for handling long-term guarantees in the context of insurance contracts as specified by the new Solvency II supervisory regime. The aim in carrying out the simulation calculations, which are representative for the entire EU, was to evaluate potential instruments capable of ensuring adequate coverage of the risk arising from long-term guarantees under highly volatile or extraordinary market conditions. The study was carried out by EIOPA under a mandate from the European Parliament, the Council of the European Union and the European Commission, and the findings are to be used in finalising details of EU legislation for implementing Solvency II.
“The insights for Austria’s insurance undertakings are largely comparable to those applying to the market in the EU overall,” FMA Executive Director Helmut Ettl observed, adding, “It would be worthwhile to supplement the future Solvency II supervisory regime by applying several of the proposed methods, as these would mitigate any extreme impact of short-lived market volatility, which has little significance for long-term guarantees.”
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