LONDON (Reuters) - New European Union capital rules treat insurers like traders making risky short-term bets and require them to set aside too much capital, trade body Insurance Europe said on Wednesday.
Fifteen years in the making, the Solvency II regulations came into force in Europe in January 2016 with the aim of ensuring that companies have enough capital to cover underwriting, investment and operational risk.
British insurers Prudential <PRU.L> and Legal & General <LGEN.L> have complained that the rules make it harder for them to compete with insurers globally.
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"The many layers of conservativeness built into the design of Solvency II and its tendency to treat insurers like traders instead of long-term investors could harm consumers, long-term investment and the economy," Insurance Europe said in a statement.
"Policymakers need to take action to make the framework more reflective of reality."
Insurers have to calculate the level of assets they need today to pay future liabilities such as pensions on the basis that interest rates will stay low for the next 20 years, which Insurance Europe described as "an unlikely scenario".
The European Commission is due to review the Solvency II rules in 2018.
(Reporting by Carolyn Cohn; Editing by David Goodman)