Supervisors fret over grasp of prudent person rule

As insurers increase investment in non-traditional assets, some regulators are worried that too few are taking Solvency II’s prudent person principle on board. Clive Davidson reports

Solvency II’s unshackling of insurers’ ability to choose the asset classes they invest in is welcomed by the industry as it struggles to find yield and meet other business needs. At the same time, politicians are encouraging insurers to fulfil a social function and channel investment towards areas that will help European economic growth. This has spurred interest in non-traditional assets, such as infrastructure, private equity and lending. However, regulators are now worried that firms are