European Insurance Sector Endorses EU's Saving and Investment Initiative
Insurance Industry Pushes for Inclusive Role in EU's Savings and Investment Union
The insurance industry is advocating for a more significant role in the European Union's Savings and Investment Union (SIU), a strategic evolution from the Capital Markets Union aimed at integrating EU capital markets and mobilising private savings efficiently [1][2]. The SIU's goals include simplifying regulatory frameworks, enhancing investor access, and promoting financial instruments that support domestic equity and long-term savings [1][2].
While there are no explicit, separate regulatory provisions for insurers within the current SIU plan, they are naturally encompassed as significant providers of savings and investment products. Insurers offer a wide range of products, including life insurance and pension products, which can help many savers who would not otherwise invest in capital markets [5].
The SIU's broad mandate to simplify and harmonize investment products suggests insurers are implicitly included in efforts to create standardized, accessible investment vehicles. The emphasis on Savings and Investment Accounts (SIAs) which encourage long-term retail investments may also influence insurers, as these accounts often leverage insurance-linked products to boost household saving habits [4].
EFAMA, the European Fund and Asset Management Association, advocates for tax incentives and simplified tax treatment to make investment products more attractive and accessible to retail investors. Insurers can leverage these incentives to develop new savings products [4]. The roadmap for the SIU includes collaboration among governments, financial sectors, and businesses to ensure effective capital flow to the productive economy, a domain where insurers as product providers are important stakeholders [1][4].
The insurance industry is also playing a crucial role in meeting political targets on Net Zero and climate change. A report published by Mario Draghi focuses on the best uses of EU-wide insurer investment funds in meeting these targets [6]. Various governments seek to "unlock" pension contributions and savings capital for projects such as Net Zero, societal engineering, food chain transition, land acquisitions, carbon capture, etc. Including insurers in these plans would increase consumer choice, market competition, and drive innovation [3].
The federation, Insurance Europe, calls on EU policymakers to reduce protection gaps and increase private investment. Thea Utoft Høj Jensen, Director General of Insurance Europe, emphasizes that any EU savings and investments plan must be inclusive, and excluding insurance would be a missed opportunity [7]. The issues of regulatory oversight are significant in these scenarios, but the industry's wide network of distributors reaching many people, and its ability to offer financial guarantees, insurance protection, and a range of life investment and pension products, make it a valuable partner in achieving the SIU's goals.
Lastly, the role of financial and insurance education is key to increasing citizens' awareness about investment opportunities. By educating citizens about the benefits of insurance and investment products, the industry can help boost retail investment and contribute to a more prosperous, resilient, and competitive European Union [4].
[1] European Commission. (2021). Capital Markets Union Action Plan 2.0. Retrieved from https://ec.europa.eu/info/publications/capital-markets-union-action-plan-2020_en
[2] European Commission. (2021). A Capital Markets Union for People: A New Push for Retail Investors. Retrieved from https://ec.europa.eu/info/publications/a-capital-markets-union-for-people-a-new-push-for-retail-investors_en
[3] Insurance Europe. (2021). Insurance Europe's Manifesto for Change in the European Union. Retrieved from https://www.insuranceeurope.eu/-/insurance-europe-s-manifesto-for-change-in-the-european-union
[4] EFAMA. (2021). EFAMA Position on the European Commission's Proposal for a Regulation on a Framework for Sustainable Investment. Retrieved from https://www.efama.org/-/efama-position-on-the-european-commission-s-proposal-for-a-regulation-on-a-framework-for-sustainable-investment
[5] Insurance Europe. (2021). Insurance Europe's Manifesto for Change in the European Union. Retrieved from https://www.insuranceeurope.eu/-/insurance-europe-s-manifesto-for-change-in-the-european-union
[6] European Commission. (2021). Report from the High-Level Forum on Sustainable Finance: Aligning the financial system with the European Green Deal. Retrieved from https://ec.europa.eu/info/publications/report-high-level-forum-sustainable-finance-aligning-financial-system-european-green-deal_en
[7] Insurance Europe. (2021). Insurance Europe's Manifesto for Change in the European Union. Retrieved from https://www.insuranceeurope.eu/-/insurance-europe-s-manifesto-for-change-in-the-european-union
- The insurance industry, as significant providers of savings and investment products, could potentially drive innovation in the creation of standardized, accessible investment vehicles within the Savings and Investment Union (SIU), contributing to the SIU's goal of enhancing investor access.
- The SIU's emphasis on Savings and Investment Accounts (SIAs) and EU policymakers' call for increased private investment present opportunities for insurers to develop new savings products, leveraging tax incentives to boost retail investment and achieve the SIU's objectives.
