The European insurance industry supports the Commission's sustainability objectives and generally welcomes the Commission's amendments to integrate sustainability into insurers' prudential framework and sales processes.
Insurance Europe appreciates the Commission's proposals for amendments on the definition of sustainability risks and factors within Solvency II, which are consistent with existing legislation and are of financial materiality. Insurance Europe also highlighted suggestions to improve the Commission's proposals in some areas.
Specifically, Insurance Europe called for the removal of the current definition of environmental, social and governance (ESG) preferences of policyholders, highlighting that the need to clarify sustainability preferences should be dealt with in the regulatory technical standards (RTS) of the Sustainable Finance Disclosure Regulation (SFDR), not in the context of Solvency II or the IDD. Similarly, the reference to the ESG preferences of policyholders should be removed in the context of the prudent person principle.
Regarding sustainability in the prudent person principle, Insurance Europe suggested that the Commission's proposal should recognise existing difficulties in terms of feasibility and proportionality, in order to take account of the actual impact of investment decisions on sustainability factors and to avoid potential contradictions with the principle of freedom of investment.
Regarding the scope of the proposed amendments, Insurance Europe raised concerns that proposed changes to the IDD appear to apply to all products, not just those which are designed as sustainable products. It is important that this is clarified in the final legal text. Insurance Europe suggests that the Commission reverts to the European Insurance and Occupational Pensions Authority's original drafting which provided the necessary legal certainty.