Dutch life insurers face challenges ahead of Solvency II
Several life insurance companies in the Netherlands are insufficiently prepared to meet the new European regulatory framework Solvency II, the results of the latest stress test conducted by the European Insurance and Occupational Pensions Authority (EIOPA) confirmed.
The EIOPA stress test monitored the ability of European life insurers to comply with the Solvency Capital Requirements (SCR), an element of Solvency II which is effective as of 2016.
Although the majority of life insurers surveyed managed to comply with the criteria, several insurers, including Dutch names, failed to achieve the minimum SQR level of 100%. Details of the performance for individual companies has not been released.
Jan Sijbrand, executive director and chairman prudential supervision at DNB has expressed his concern about the positioning of Dutch Life insurers in a recent interview with Het Financieele Dagblad.
According to Sijbrand, many Dutch insurers anticipate that the market may have reached a through. “We don’t think that is the case, we think they need to think about the future” he warns.
The stress test also flagged up that Dutch insurers are relatively susceptible to challenges presented due to a persistent low interest environment. This is partly due to a duration mismatch between long-term insurance obligations and short-term investments.