In its response, Insurance Europe highlights that European insurers fully support the European Commission’s sustainability goals and emphasises that existing Solvency II requirements, enhanced in August 2022, already ensure effective risk management of sustainability risks in the insurance sector. It notes that additional duplicative requirements would impose unnecessary costs without clear benefits.
The industry proposes the following changes to the SRP proposals to align which will reduce operational and reporting burdens, consistent with the Commission’s Omnibus initiative to cut red tape and simplify EU rules for citizens and business:
• Limit minimum standards to climate risks: The requirements in the updated Solvency II Directive covers ESG factors but does not mandate minimum standards for all ESG areas. Social and governance risks lack established methods and metrics, making prescriptive requirements impractical.
• Align with existing frameworks: Any new requirements must be consistent with established regulatory obligations - such as CSRD, ESRS, ORSA and Pillar 3 reporting - to prevent duplication and inefficiencies.
• Ensure full proportionality: Proportionality must apply to all undertakings, not just small and non-complex ones (SNCUs).
• Address implementation challenges: Inconsistencies in time horizon definitions, misalignment with Solvency II risk categories, data limitations, ESG measurement difficulties, and diverging third-country disclosure approaches create confusion and should be resolved.
• Revise proposed metrics: The proposed minimum metrics are too extensive and misaligned with insurers’ risk profiles.
• Set realistic sustainability targets: Targets should align with risk appetite and strategy, focusing on managing rather than mitigating material risks, while remaining flexible and business-specific.
• Avoid rigid application guidance: Non-binding EIOPA guidance should not become de facto binding rules, ensuring insurers retain flexibility in risk management.
|
