Insurance experts downplay fears about risk margin
BoE paper’s prophesies of lower investment and thinner liquidity are too dramatic, specialists think
The claim in a recent Bank of England (BoE) staff paper that the Solvency II risk margin would cause UK life insurers to dump as much as £125 billion of risky assets in a future scenario of falling rates might seem to strengthen the case for eliminating the risk margin altogether.
The bank – which has previously expressed concerns about the procyclicality of insurance regulation – is a key voice in the current European debate on the revision of Solvency II’s controversial risk margin.
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