EIOPA has published a Discussion Paper on Standard Formula Design and Calibration for Certain Long-Term Investments. The publication follows a request from the European Commission for EIOPA to examine whether the calibration and design of regulatory capital requirements for insurers’ long-term investments in certain asset classes under the Solvency II regime necessitates any adjustment or reduction under the current economic conditions, without jeopardizing the prudential nature of the regime.

EIOPA has already completed an in-depth analysis of certain asset classes and the Discussion Paper summarises these preliminary findings and contains specific questions for stakeholders. Feedback provided by interested stakeholders will assist EIOPA in producing an informed recommendation on the review of the design and calibration of the standard formula in relation to the asset classes considered. EIOPA will also examine the influence that the maturity of insurance liabilities has on regulatory capital requirements for long-term investments. In addition, EIOPA will analyse non-regulatory obstacles for long-term investments by insurers.

EIOPA invites submissions from all interested parties before 28 May 2013, with a final report to be published in early July. The report will also take into account the results of the Long-Term Guarantee Impact Assessment. Combining the results of these two important pieces of work allows for a full examination as to whether the regulatory framework of Solvency II should be amended to facilitate long-term investments.

Please click here to view the full text of the Discussion Paper.