Insurers’ investments in the European economy continued to grow during 2013. Concerns remain, however, about how the Solvency II directive will affect their ability to continue as Europe’s largest long-term stable investors, according to Insurance Europe, the European insurance and reinsurance federation.

As of 31 December 2013, the European insurance industry had over €8.5 trillion of assets under management, representing a 3.2% growth at constant exchange rates compared with 2012, according to the federation’s annual Key Facts booklet, that was published today.

Michaela Koller, director general of Insurance Europe, commented: “Insurers make a huge contribution to the European economy by promoting growth and stability through long-term investments equal to around 60% of Europe’s GDP. This role is, however, under threat. While the industry welcomes the move to a risk-based regulatory regime and recognises that the final version of Solvency II was improved to avoid a huge negative impact on long-term investments, aspects of the directive and how it is implemented will still require insurers to hold inappropriately high amounts of capital against their long-term investments.

“This will make it more expensive for insurers to invest in long-term government and corporate bonds, as well as growth-stimulating activities, such as infrastructure projects. This could discourage insurers from making these vital investments, which would have a significantly negative effect on the European economy at a time when boosting growth is an overall policy objective.”