The European Authority for Insurance and Retirement Plans (EIOPA) today published the results report of the Impact of Life Insurance Products with Long-Term Guarantees (LTGA) exercise.
The members of the trilogue, the European Parliament, the Council and the European Commission, agreed in July 2012, before continuing 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 savings in which the insurance companies, after the payment of premiums by the policy holder, guarantee a capital or future income.
In conjunction with the different National Insurance Supervisory Authorities, EIOPA launched on January 28, 2013 the Long Term Guarantees Impact Study, commonly known by its English acronym LTGA (Long Term Guarantees Assessment). The purpose of this study has been to analyze the solvency of the insurance entities that provide this type of long-term guarantees, before 13 different scenarios, with variations in interest rates and computed assets, among other variables.
Driven 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 EIOPA proposal to consolidate the Classical Matching Adjustment with immaterial risk of mortality in European Law comes to recognize the role that Spanish financial immunization has been playing; in other words, the method in which Spanish insurance entities manage this type of product, 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 guaranteed products with considerable added value for consumers.
The General Directorate of Insurance and Pension Funds thanks the insurance sector as a whole for its high participation in this European impact study.