Insurance Europe outlines key priorities for Capital Markets Union

Insurance Europe, an association representing insurers and reinsurers, stresses that Capital Markets Union (CMU) should aim to increase retail investment, diversify financing sources for EU companies and foster an environment conducive to innovation, competition and growth within EU companies.

Launched 10 years ago, the CMU aims to create a unified capital market to strengthen investment and savings flows across the EU.

The position statement highlights the insurance industry’s important role not only in providing financial protection, but also in providing pensions and savings, and acting as a major long-term institutional investor.

European insurers have invested around €9.5 trillion in the economy, with 69% of that investment in equities, corporate bonds and government bonds within the EU.

Olaf Jones, Deputy Executive Director of the European Insurance Agency, said: “Capital Markets Union must be a priority to unlock the investment that will deliver a green, digital and globally competitive Europe. The EU must now focus on unlocking more private investment, reducing excessive regulation and reporting, and increasing access to SME equity, venture capital, SME debt and infrastructure.”

“Achieving these targets will enable the insurance industry to contribute to financing the green and digital transition and continue to invest for the long term. This will boost growth, create more jobs and pave the way for a stronger Europe, both financially and economically.”

Insurance Europe has outlined several priorities for the Capital Markets Union (CMU).

• Simplifying consumer investment in savings and retirement products: A survey revealed that 72% of Europeans have no investment in financial products. The EU retail investment strategy should raise awareness among Europeans and make the investment process easier.
• Prudential regulation reform: The ongoing review of Solvency II, the EU’s insurance regulatory framework, must address excessive capital requirements and volatility that act as barriers to long-term, guaranteed and profit-sharing products and investments.
• Strengthening financial and insurance education: Improving Europeans’ knowledge, confidence and skills in financial products is vital, and a pensions dashboard and tracking system will help encourage citizens to invest more.
• Expanding insurers’ access to a range of funds: Increasing access to SME equity, venture capital, SME debt and infrastructure funds will create needed scale and opportunity for insurers. It is important to recognise successful funds and scale their use.
• Facilitating cross-border investment: Building trust and confidence in cross-border investment can be achieved through improved insolvency laws and stronger protection for intra-EU investments.
• Reduce your regulatory burden: The European Commission should deliver on its commitment to reduce regulatory reporting by 25%. New regulations should be introduced only when necessary, be simple, appropriate and avoid unintended consequences.