Insurers claim draft level 2 proposals could water down volatility adjustment

Chart volatility

Insurers are calling for the European Commission (EC) to amend new proposals for calculating Solvency II's volatility adjustment, claiming they could reduce the benefit insurers can obtain from the mechanism. Insurers are also arguing for greater consistency with the matching adjustment's treatment of fixed income spreads. The volatility adjustment is an allowance to the discount rate designed to protect insurers with long-term liabilities from the impact of volatility. It is based on a risk-