The European Insurance and Retirement Plans Authority (EIOPA) today published the report of the results of the Impact of Long-Term Guarantees Life Insurance (LTGA) exercise.
The members of the trilogue, European Parliament, Council and European Commission, agreed in July 2012, before moving forward with the Omnibus II Directive, that Solvency II should include regulatory measures to take into account the characteristics of life insurance with guarantees to long term; that is to say, of the life insurance of saving in which the insurance companies, after the payment of premiums by the policyholder, guarantee a capital or future rent.
In conjunction with the various National Insurance Supervisory Authorities, EIOPA launched on January 28, 2013 the Long Term Guarantees Impact Study, commonly known by its acronym LTGA (Long Term Guarantees Assessment). The purpose of this study was to analyze the solvency of insurance companies that provide this type of long-term guarantees, in the face of 13 different scenarios, with variation in interest rates and computed assets, among other variables.
Promoted by the General Directorate of Insurance and Pension Funds, and thanks to the collaboration of the Spanish insurance sector through UNESPA, the EIOPA report (which is available on its website) supports the use of the Classic Matching Adjustment with the possibility of include an immaterial risk of mortality.
The proposal of EIOPA to consolidate in European Law the Classic Matching Adjustment with immaterial risk of mortality comes to recognize the role that has been playing the Spanish financial immunization; that is, the method in which Spanish insurance companies manage this type of products while guaranteeing the solvency of companies.
The recognition of this mechanism means assuming that the Spanish life insurance sector applies cutting-edge techniques and that, as a channel for long-term savings, it offers products with guarantee and considerable added value for consumers.
The General Directorate of Insurance and Pension Funds thanks the insurance sector as a whole for the high participation in this European impact study.