Insurance Europe has responded to a consultation on the European Insurance and Occupational Pensions Authority’s (EIOPA) advice to the European Commission on the identification and calibration of infrastructure corporates in Solvency II.
In its response, Insurance Europe said it has strong concerns about EIOPA’s approach to the calibration of the capital requirements, and that the capital approach of project finance should be extended to qualifying corporates.
The federation also noted that the capital charges developed for infrastructure are already conservative compared to the true economic risks to which insurers are exposed, namely exposure to default losses for bonds and the real risk of long-term underperformance of equity infrastructure.
It also raised several concerns about EIOPA’s intention to calibrate capital requirements for infrastructure corporates based on available market data. For example, it said that the available data mainly represents public entities and is, therefore, not representative of the predominantly private deals that insurers also engage in.