The chairman of the European Insurance and Occupational Pensions Authority has said the reforms of capital adequacy requirements for the insurance sector were “important and needed”.
He said: “In 2020 we see sound risk management by insurers. We see a more diversified investment policy and insurers investing only in assets whose risks they can identify, manage and control.
“It is a reassurance to us all that Solvency II has proved to be a lasting supervisory framework. It has inspired many countries to improve their own regimes.”
Mr Bernardino was speaking at the Association of British Insurers’ biennial conference in London about his vision for the insurance industry in seven years’ time.
He also said that by 2020, product suitability would be “top of the agenda” for insurance companies.
Mr Bernardino added: “Board members want to make sure that product characteristics are suitable to the target market, that distribution channels are appropriate for that market segment and that full transparency on costs is provided to consumers.
“This has reduced the potential for mis-selling and increased consumer confidence.”
Howard Bullock, director of Essex-based Clear Financial Advice, said: “Solvency II is not really on our radar yet, in terms of it having a material effect on insurers. It’s highly important the large financial companies are suitably capitalised but whether Solvency II will solve that remains to be seen.”