European Insurance: General (12 December 2016)

OAC Digest
EU / European Parliament / EIOPA, Investments, Life insurance, Non-Life, PRIIPs

12 December 2016

Selected recent European Insurance news items of more general interest: 

On 8 December 2016, the European Council adopted text on the PRIIPs rules approved by Parliament last week. The KIDs regulation will now apply from 1 January 2018.

"The European macroeconomic environment remains fragile, further challenged by a number of geopolitical risks" according to EIOPA's Financial Stability Report published on 8 December 2016. The report includes the following points for insurance firms:

1.  Continued challenges arising from a prolonged period of low interest rates:

  • especially where exposed to life insurance contracts with guarantees;
  • fosters the evolution of business models towards unit-linked investments, shifting investment risks to policyholders; and
  • may encourage excessive risk-taking but undertakings need to abide by "prudent person principle".

2.  Lapse rates have been growing to some extent.

3.  The SCR coverage ratio for the median insurance company (non-life/life/both) is around 200 per cent.

4.  The sector is extensively exposed towards the banking sector.

5.  The advent of the sharing economy creates promising opportunities.

6.  Cyber risks challenge companies but also offer opportunities to create new products.

7.  Technological changes are transforming the health segment and raising new issues and personalised and advanced diagnostics may improve treatment effectiveness and potentially decrease costs.

On 8 December, the EC announced that the Parliament, the Council and the Commission have agreed on revamped prospectus regulation intended to give companies easier access to capital markets. This is seen as "a major milestone in the path toward a European Capital Markets Union".  

The European Parliament has published a briefing on the UK's role in the single market for financial services.

[For information] On 9 December, the European Scrutiny Committee published a report recommending a debate, saying EU tax proposals do not respect the principle of subsidiarity. The European authorities propose a single set of rules to calculate cross-border companies' taxable profits in the EU - a Common Consolidated Corporate Tax Base (CCCTB). (The first of 2 steps requires agreement on the Common Corporate Tax Base (CCTB).) The EC fact sheet states that "Member States will continue to decide their own corporate tax rates."

David Gray

For more information
David Gray
Consultant Actuary

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