(Reuters) – European regulators need to review their capital rules to free up insurers to invest more in climate-friendly infrastructure projects, the CEO of the German insurance company Allianz said on Wednesday.
"Today, the regulations we have in Europe have actually discouraged us from helping with the transition," said Oliver Baete, speaking at a virtual meeting of the World Economic Forum and discussing how to finance the transition with low carbon emissions.
As a European insurance company, Allianz is subject to rules called Solvency II, introduced after the financial crisis to ensure that there is enough money to pay off claims during a future crisis.
However, the rules have been criticized for forcing insurance companies to lock in too much money, making it less worthwhile to invest in certain assets.
“We overcapitalize … investments in infrastructure. It's one thing if you invest in listed stocks, which can be very volatile (and) lose value for a while, but we apply the same capital logic to infrastructure investments even though the risk is very different.
Among calls from decision-makers to raise private sector capital to finance the global energy transition, Baete said the issue was critical and needed to be addressed "very quickly."