FRANKFURT Dec 14 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.