Policy-makers urged to widen scope of matching adjustment 'for good of society'

Current proposals would transfer risk to consumers and increase price of guarantees, argues consultancy

European policy-makers should adopt a more liberal approach to the application of the matching adjustment for discounting long-term liabilities under Solvency II, according to Towers Watson.

The consultancy argues that if a narrow approach to the matching adjustment as currently proposed is adopted then the insurers are likely to reduce the guarantees they offer to consumers and increase the price of guaranteed products.

In addition, the current proposals for the matching adjustment, which is