EC considering new framework to oversee macroprudential risks facing non-bank financial institutions
European insurers have rejected proposals for a wider macroprudential framework of regulation overseeing all non-bank financial intermediaries (NBFI). In response to a consultation published by the European Commission (EC) in May, Insurance Europe said there is no need for more EU regulation.
“There is limited risk posed by the insurance sector,” Insurance Europe said, adding that existing regulation is sufficient. “The NBFI categorisation and terminology is unhelpful and unconducive to policymaking,” it said. “The European insurance sector is already well regulated and supervised.”
Under the Solvency II review conducted by the EC, the macroprudential framework for Europe’s insurance sector has been strengthened further, Insurance Europe said, with new macroprudential requirements for insurers and new macroprudential powers for regulators.
It further argued that liquidity risk is not a significant issue for Europe’s insurers and is rarely problematic.
“The EC’s work on NBFIs should refrain from creating more regulation for insurers,” it argued in a submission to the EC’s consultation.
For the EC’s part, it is concerned that the expansion of Europe’s NBFI – including insurers, pension funds, asset managers, investment funds and supply chain finance companies – has created new risks to financial stability. Further, the growing interconnectedness between banks, which are subject to Europe-wide macroprudential rules, has increased the risk of contagion across the financial sector, the EC said...
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