Tonight, on 13 December 2023, a preliminary political agreement on the review of the Solvency II directive was reached at interinstitutional level. Henrike Hahn, Member of the European Parliament (The Greens/EFA), substitute member of the ECON committee and shadow rapporteur for Solvency II comments:

“After more than a year and a half of intensive negotiations, nothing stands in the way of European insurance reform anymore. Today's agreement on Solvency II is a clear success for climate protection. As long-term investors and risk managers, insurers will now have to seriously address climate risks in the future.

With Solvency 2, climate protection will now become an essential part of the work of insurance companies.

The final text bears a clear, green handwriting by requiring insurance companies to draw up and disclose transition plans that address sustainability and transition risks with respect to climate neutrality objectives.

Another green success is that the European Insurance and Occupational Pensions Authority (EIOPA) received a mandate to assess whether specific capital requirements should be set for sustainability and biodiversity risks. However, it is regrettable that this reform fails to introduce the so-called “one-for-one rule” for insurers already today, according to which insurance companies must fully cover the risks of every single euro invested in fossil fuels with one euro of own capital.

It is highly problematic that massive capital relief for insurers was granted at the urging of conservative and right-wing extremist forces.

The decision to release capital follows the general trend of financial deregulation that we can observe at the EU level. A decline in capital requirements during times of heightened financial stability risks is particularly dangerous. Due to major lobby pressure and the interests of individual member states, Solvency 2 could now create massive damage to policyholders’ and European taxpayers’ wallets.

Another great success of our green initiative is that the risks posed by crypto investments will be better measured in the capital requirements in the future. In doing so, we are contributing to financial stability in the insurance sector.

We have also been able to tighten the fit and proper requirements for management personnel with respect to money laundering and other financial crimes. Furthermore, we require insurers to set clear, quantitative objectives for a balanced gender representation in management.”

 

I would be happy to answer any further questions.