Update on way for insurance solvency rates

Date: 24/05/01

TWO new financial services directives aimed at updating insurance solvency rates are set for "fast-track" adoption by MEPs.

The directives are expected to be agreed after just one reading in the European Parliament - avoiding the usual months of delay caused by a second reading.

Austrian Socialist Harald Ettl, charged with steering the laws through, said he had sought changes to boost consumer protection and transparency.

The economic and monetary affairs committee will finalise its position on 28 May, ahead of the full vote of the Parliament. Ettl said he had worked closely with the Swedish presidency to ensure there was unlikely to be opposition from single market ministers when they meet on 31 May.

The key aim of the directives is the updating of solvency rates after a quarter of a century of inflation in the Union. One Commission insurance expert said: "You need a bit of buffer capital to protect against bad storms, dud investments and so on."

The new minimum rates are €3 million - up from €0.8 million - for life insurance, while for some parts of the non-life insurance business they rise to €2 million, up from the current range of h0.2 million to €1.4 million.

The directives will allow member state regulators to set more stringent requirements according to local conditions and should pave the way for further proposals examining wider financial control of insurance firms.

Two new financial services directives aimed at updating insurance solvency rates are set for 'fast-track' adoption by MEPs.