Insurance Europe has responded to a European Insurance and Occupational Pensions Authority (EIOPA) consultation on Regulatory Technical Standards (RTS) related to the management of sustainability risks under the Solvency II framework.
In its response, the federation said that European insurers fully support the European Commission’s sustainability objectives, emphasising that the existing Solvency II requirements already ensure effective risk management of sustainability risks in the insurance sector.
Introducing additional requirements would also increase costs without delivering clear benefits, Insurance Europe said, adding that the insurance industry has already proposed several changes to the Supervisory Review Process (SRP) proposals to reduce operational and reporting burdens.
Meanwhile, Insurance Europe has suggested limiting minimum standards to climate risks, as the updated Solvency II directive covers ESG factors but does not mandate minimum standards across all areas. It argued that social and governance risks lack established methods and metrics, making prescriptive requirements impractical.
The federation also called for alignment with existing regulatory frameworks, including the Corporate Sustainability Reporting Directive (CSRD), European Sustainability Reporting Standards (ESRS), Own Risk and Solvency Assessment (ORSA), and Pillar 3 reporting, to report duplication and inefficiencies.
It also highlighted implementation challenges, including inconsistencies in time horizon definitions, misalignment with Solvency II risk categories, data limitations, ESG measurement difficulties and varying third-country disclosure requirements. It argued that the proposed minimum metrics are too extensive and do not align with insurers’ risk profits.
In October 2024, Insurance Europe expressed concerns on the implementation of a new proportionality framework under Solvency II.
One of the major concerns the federation raised at that time was the proposed restriction on applying proportionality measures only to companies with risk profiles that are “not materially different” from small and non-complex undertakings (SNUCs).
The federation also raised concerns regarding cross-border operations and the use of innovative reinsurance strategies. It said that EIOPA’s suggestion that cross-border business or innovative reinsurance techniques carry more risk is “unfounded and should be removed.”
