German regulator fires warning shot over insurance rules
Monday, 5 August 2013 00:00
-
- {{hitsCtrl.values.hits}}
FRANKFURT (Reuters): Germany could quit talks on new risk rules for Europe’s insurance industry if regulators try to impose a ‘one size fits all’ deadline for insurers to adapt to them, a senior official at financial watchdog Bafin said.
“If someone forces us to stick with an inflexible timeframe for the phase-in because of some purist ideal ... we would in the worst case just say goodbye,” Felix Hufeld, Bafin’s head of insurance supervision told the Wall Street Journal Deutschland in an interview published on its web site on Saturday.
He echoed concerns voiced by German insurance trade body GDV, which has said a proposal to give insurers seven years to adapt to the new rules – called Solvency II – was insufficient.
Solvency II aims to protect consumers better by pushing insurers to improve risk management and match capital reserves more closely to risks.
“We shouldn’t forget that all these regulatory changes are taking place in a low interest rate environment. Every now and then you have to ask how big of a burden a company can even shoulder,” Hufeld said.
Big insurers such as Allianz, AXA, Generali, Aviva and Legal & General are considered to be well prepared for Solvency II’s risk-management requirements.
Some smaller insurers, however, could struggle to shoulder the additional administrative burdens.
Hufeld said it should be decided on a company-by-company basis how much time insurers will get to adapt to the rules.
“Of course, no insurer can just say it needs 20 years to adapt if we can see in its numbers that it’s really only 10 years. We will monitor that, of course. But we also want to avoid an insurer toppling just because it complies with new regulation,” he said.
Solvency II was meant to be in force by now but was delayed after Britain, Germany and France called for a rethink over how products that offer guaranteed returns over the long term are treated to avoid overly burdensome capital requirements.
Talks between the European Commission, the European Parliament and national governments are due to resume in September.
Hufeld said it still appeared “absolutely realistic” that Solvency II will launch on Jan. 1, 2016, as now planned. In January, Bafin head Elke Koenig had said she saw Jan. 1, 2017 as a more realistic start date.
Germany’s big insurers have already invested millions of euros to get ready for the start of Solvency II, Hufeld said. “They are practically working on this day and night.”
