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Law360, London (September 25, 2020, 6:56 PM BST) -- The COVID-19 pandemic has injected "real urgency" into plans to free up alternative sources of funding for businesses in the European Union, the bloc's executive body said Thursday, as it unveiled a new action plan to reignite its capital markets union project.
Valdis Dombrovskis, an executive vice-president at the European Commission, released a 16-point plan that he said would aid the bloc in its economic recovery.
The plan is geared toward breathing new life into the two-year-old capital markets union program, which aims to free up capital to invest into businesses and infrastructure projects.
"The strength of our economic recovery will depend crucially on how well our capital markets function and whether people and businesses can access the investment opportunities and market financing they need," Dombrovskis said.
The measures include the creation of a single access point to company data for investors, the simplification of rules on public listings, and plans to offer greater support for insurers and banks to invest in the economy.
In response, trade body Insurance Europe said the commission needed to overhaul the bloc's Solvency II Directive so they can play a greater role in investing in the economy.
The directive governs how much money insurers are required to hold onto in order to withstand economic shocks, but insurers have warned previously that certain elements of the rules overestimate how much capital is required.
"The [capital markets union] offers a significant opportunity for Europe's insurers to play an even bigger role in providing much needed long-term investment to underpin recovery and growth in Europe, if problems with our regulatory framework, Solvency II, are fixed," Michaela Koller, Insurance Europe's director general, said.
Insurance Europe said elements of Solvency II need to be replaced, like the risk margin, which requires life and pensions insurers to hold extra capital to protect against the possibility that a customer lives longer than expected.
Insurers have previously said the risk margin was devised when interest rates were high and was not appropriate for a negative rate environment.
The European Insurance and Occupational Pensions Authority is currently carrying out a review of Solvency II. Controversially though, there are no proposals to change risk margin in its 878-page consultation paper.
--Editing by Abbie Sarfo.
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