The EESC issues between 160 and 190 opinions and information reports a year.
It also organises several annual initiatives and events with a focus on civil society and citizens’ participation such as the Civil Society Prize, the Civil Society Days, the Your Europe, Your Say youth plenary and the ECI Day.
The EESC brings together representatives from all areas of organised civil society, who give their independent advice on EU policies and legislation. The EESC's326 Members are organised into three groups: Employers, Workers and Various Interests.
The EESC has six sections, specialising in concrete topics of relevance to the citizens of the European Union, ranging from social to economic affairs, energy, environment, external relations or the internal market.
The rules of Solvency II, the 2009 EU regulatory framework for insurance firms, have proved their worth but need to be adapted to new circumstances. In an opinion adopted at its plenary session on 23 February, the European Economic and Social Committee (EESC) welcomed the initiative of the European Commission to revamp Solvency II. The Committee stresses the considerable interest of civil society in ensuring the stability of the financial sector, and therefore calls for sound capital requirements and risk preparedness in the insurance sector.
The EESC strongly supports the idea of making the insurance sector play a greater role as an investor in financing the transition to a sustainable economy and in tackling the impact of COVID-19 and climate change. It also welcomes the Commission's objective of better addressing the issue of systemic risks. However, the principle of proportionality should be refined, as well as capital requirements. Furthermore, the ordinary legislative procedure involving the European Parliament and civil society via consultation of the EESC should be given preference over delegated acts in important economic matters. Lastly, the Committee proposes that a full evaluation of the thinking behind the Solvency II framework should be carried out in the coming years.
Implementing the EU Green Deal and overcoming the consequences of the COVID-19 pandemic are the top priority, requiring large sums of public and private capital. Europe's insurance sector, with an investment portfolio of over EUR 10 trillion in 2020, could contribute much more than it currently does to the efforts, but its ability to do so is largely determined by the capital and risk-preparedness requirements in the Solvency II system, says EESC rapporteur, Jörg Freiherr Frank von Fürstenwerth.
Co-rapporteur Christophe Lefèvre adds: The risk profile of insurers is changing. As investors, they also face higher risks. Therefore, the Committee stresses the considerable interest of civil society in ensuring the stability of the financial sector. It means that sustainable insurance supervision requires a fact-based risk assessment and a calculation of capital based on that, not the other way around.
Long-term guarantee measures
The EESC welcomes the intention to strengthen the proportionality principle. Simplifying the very complex and burdensome regulatory framework is particularly important for smaller and less risk-exposed insurers, which are an important part of the EU insurance landscape, and a major EU asset. It is true that the Solvency II risk-management and reporting requirements should be reviewed and adjusted on the basis of rules. However, it is regrettable that it is still only the size of an undertaking that matters and that no comparison is made between the scope of the prudential requirements and an insurer's actual risks based on its business model.
The Committee also supports the work on more fit-for-purpose capital requirements. European sustainability goals must not be jeopardised by insufficient capital requirements that artificially turn highly polluting activities into profitable investments. The revision of the rules on the necessary capital requirements will be the key to addressing this issue. Furthermore, the EESC considers it essential only to modify the Solvency II rules to the extent that the prudential objectives of protecting insured persons and beneficiaries and the objective of financial stability are not jeopardised. The aim must be to strike the right balance between incentives for insurers to invest in activities focused on social and environmental objectives, on the one hand, and prudential requirements, on the other. This balance has not yet been found.
Legislative procedure, evaluation of adjustments and competitiveness
The Commission announces a number of proposals that it would like to implement through delegated acts. These proposals carry great weight and are of significant economic importance. Examples include volatility adjustment, matching adjustment and extrapolation, as well as the very political decision as to the extent to which Green Deal funding should be facilitated and the limitations that should apply to investment risk assessments in this regard. Both here and elsewhere, the Committee calls for important economic matters to be dealt with under the ordinary legislative procedure involving the Parliament and consulting civil society, rather than through delegated acts. Before the adoption of the Solvency II package, the European Parliament, the European Commission and the EESC should have a clear picture of the content and impact of any delegated acts.
The Committee also proposes that a full evaluation of the thinking behind the Solvency II framework should be carried out in the coming years. The framework conditions have now changed in many ways and will continue to change, making evaluation absolutely essential.
Finally, the EESC believes it would have been a good idea to carry out a competition check to determine the impact of the amended rules on the competitiveness of the European insurance sector – in all its diversity – vis-à-vis competitors on the world market.