Solvency II does not represent an obstacle to the integration of sustainability risks, according to Insurance Europe’s response to a consultation on the EIOPA’s draft technical advice on the integration of sustainability risks and factors in the delegated acts under Solvency II and the Insurance Distribution Directive (IDD).
This is because Solvency II already provides requirements on governance, risk management and investment decisions and those requirements apply to all material risks, including sustainability.
Regarding EIOPA’s proposals to amend specific elements of Solvency II, Insurance Europe called for consideration of proportionality in the proposed requirements. It added that the environmental, social and governance (ESG) preferences of policyholders should be taken into account under the IDD instead of Solvency II.
Regarding the IDD, Insurance Europe welcomed the clarification from EIOPA that insurers are required to consider ESG factors only in the product approval process for insurance products with an ESG profile. In addition, it stressed that the IDD already establishes appropriate criteria for determining different types of conflicts of interest, which would capture any potential conflict that could arise from ESG considerations.
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