Central Bank's Roux rejects solvency rules
The Central Bank has joined the growing chorus of regulators who are critical of new capital requirements for insurers across Europe.
The so-called Solvency II rules, which take effect in 2016, aim to ensure insurers hold enough capital to honour policyholder commitments even when markets turn sour.
The new requirements are too complex and would have done little to prevent the last crisis, Central Bank deputy governor Cyril Roux told a conference in Dublin yesterday.
"The capital requirements set up by Solvency II are clearly too complex," Mr Roux warned. "I contend that the emphasis given in European insurance regulation to quantitative requirements has gone overboard."
The rules will be an "unreliable tool to manage capital," he added.
Dame Street is not the only central bank to rubbish the new regulations. Regulators in Britain and the Netherlands have criticised the rules earlier this year while insurers such as Italy's Generali, which Europe's third-biggest insurer sales, said Solvency II will make it too pricey for insurance companies to invest in infrastructure.
The International Monetary Fund warned last week meanwhile that the failure of one life assurer "could trigger an industry-wide loss of confidence" that in turn "could engulf the financial system". Some experts fear that Solvency II could trigger failures in Germany.