Insurance Europe, the association representing insurance and reinsurance companies, emphasises that the Capital Market Union (CMU) should aim to increase retail investment, diversify funding sources for EU businesses, and foster an environment conducive to innovation, competition, and growth within EU companies.
The CMU, initiated a decade ago, seeks to create a unified capital market to enhance the flow of investments and savings across the EU.
The position paper underscores the insurance industry’s significant role, not only in providing financial protection but also in offering pensions and savings, and acting as a major long-term institutional investor.
European insurers invest nearly €9.5 trillion in the economy, with 69 percent of their investments in equity, corporate, and sovereign bonds situated within the EU.
Olav Jones, Deputy Director General, Insurance Europe, said: “The Capital Markets Union must be a priority to unleash investment that delivers a green, digital, globally competitive Europe. The EU needs to now focus on unlocking more retail investment, reducing overregulation and reporting, and increasing access to SME equity, venture capital, SME debt and infrastructure.”
“By delivering these objectives, the insurance sector can contribute financing the green and digital transition and continue to invest long-term. This will boost growth and create more jobs, paving the way for a financially and economically stronger Europe.”
Insurance Europe has outlined several priorities for the Capital Market Union (CMU):
- Simplify consumer investment in savings and pension products: A study revealed that 72 percent of citizens are not investing in any financial products. The EU’s Retail Investment Strategy should raise awareness and make the investment process easier for Europeans.
- Revise prudential regulations: The ongoing Solvency II Review, which is the EU’s regulatory framework for insurance, must address excessive capital requirements and volatility that create barriers for long-term, guaranteed, and profit-sharing products, as well as investments.
- Enhance financial and insurance education: Improving the knowledge, confidence, and skills of Europeans regarding financial products is crucial. Pension dashboards and tracking systems can help encourage citizens to invest more.
- Expand insurers’ access to various funds: Increasing access to SME equity, venture capital, SME debt, and infrastructure funds provides necessary scale and opportunities for insurers. Evaluating and expanding the use of successful funds is important.
- Facilitate cross-border investment: Building trust and confidence in cross-border investments can be achieved by improving insolvency laws and enhancing protections for intra-EU investments.
- Reduce regulatory burden: The European Commission should fulfil its commitment to cut regulatory reporting by 25 percent. New regulations should be introduced only when necessary, ensuring they are simple, proportionate, and avoid unintended consequences.
