Insurance Europe

Insurance Europe has responded to a European Commission consultation on the functioning of the EU securitisation framework which closed on 4 December.

In its response, Insurance Europe supports regulatory changes to improve the market for securitisations in line with the Commission's objectives. It outlines the issues challenges that (re)insurance undertakings face when investing in securitisations.

• The European market for securitisations is currently neither sufficiently large nor liquid enough for many insurers to invest significantly in it.
• Capital requirements remains a significant barrier for some insurers because the existing requirements for securitisations under the Solvency II standard formula are too high in relation to the actual risks.
• The extensive due diligence requirements for institutional investors in securitisations, as a whole, lead to disproportionately high costs. They make securitisations less attractive for investors and put them at a disadvantage compared to other asset classes.

While correcting the Solvency II capital charges and reducing the operational requirements will not necessarily lead to a direct increase in allocations to securitisations for all insurers, it is a necessary step to unlock the potential of the EU securitisation market.