Karel van Hulle, professor at the business and economics faculty at the University of Leuven, said reaching an agreement in next month's Omnibus II trilogue negotiations was in the interests of all stakeholders. "The trilogue negotiations started again in September and the next trilogue meeting is by the end of October. I would urge the European Council and the European Parliament to make this last step. The last mile is always the most difficult one but it's so crucial because it's a question of credibility. More than ever the insurance industry needs Solvency II", said van Hulle, speaking at the Federation of European Risk Management Associations forum in Maastricht today.
Van Hulle, who retired as the head of insurance and pensions at the European Commission in January, warned delegates that the insurance industry's fears that insurance will increasingly be dealt with by the banking sector could be realised if Solvency II is not finalised soon. "It is a risk if we do not soon finalise Solvency II, if we do not agree on an international solvency framework for the insurance industry", he said. But it was now "very likely" Solvency II would come into force in 2016 as a result of the work the European Insurance and Occupational Pensions Authority had done on the package of measures for long-term guarantee products, he added.
Van Hulle also warned of the systemic risk posed by the growing interconnection between banks and insurers. "How often do we hear that insurance industries are heavily invested in banking industry? Who is the best placed to offer the capital to the banks? It's the insurance industry, but think for a moment what a nice systemically important issue we're creating there", he said.
"The Financial Stability Board is focusing its regulatory agenda on banking with a distant look at the insurers. What's good for banks should also be good for insurers", van Hulle added.
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