EU watchdog- insurers facing high financial risks
FRANKFURT Dec 14 (Reuters) - Risks to the financial stability of insurance companies and pension funds remain high and regulators need better rules to monitor them properly, the European Union's insurance watchdog said.
Low interest rates, a weak economy and financial imbalances were creating a "significantly negative" medium-term outlook for the sector, the watchdog said.
"Despite all the positive developments in financial markets and concerted policy actions, risks to financial stability remain quite high," Gabriel Bernardino, chairman of the European Insurance and Occupational Pensions Authority (EIOPA), said in a statement on Friday.
While insurer profits and regulatory capital ratios look comfortable, supervisors are using a system that does not allow them to fully assess market and credit risk.
EU politicians and the Commission must set out a clear timetable for new, improved risk-capital rules known as Solvency II, Bernardino said.
Political wrangling has delayed finalising of the rules, and Bernardino has previously said he expects them to come into force in 2016, some three years later than planned.
In its regular financial stability report, EIOPA also said it saw a "worrying decrease" in funding positions at occupational pension funds, particularly for larger defined benefit systems in the UK and the Netherlands.