Unnecessary duplication of work, a heavy burden due to reporting and disclosure obligations, even for firms with a dozen employees – there is a lot that the insurance industry finds irritating. There is now a broad consensus in favour of easing the burden, according to the German Insurance Association (GDV), which notes that the current EU Commission President Ursula von der Leyen (whose potential second term will be put to the vote on 18 July) said that she wanted to reduce the burden by 25% per cent.

The GDV has now presented a position paper with recommendations for efficient regulation under the motto „Plea for a turnaround“. „We want to provide impetus for the newly elected EU Parliament,“ said GDV Managing Director Jörg Asmussen in an interview with the Börsen-Zeitung. „We want to improve regulation and strengthen Europe as a whole.“

The insurers want to start with a moratorium on any more burdens, putting a halt to the trend of increasing regulation density. During this period, existing regulations should be reviewed, and no additional reporting and disclosure obligations should be created.

Asmussen focuses on two short-term measures. The first is the European Sustainability Reporting Standards (ESRS), which regulate the content of sustainability reporting via the Corporate Sustainability Reporting Directive (CSRD). „According to these cross-sector standards, the first reports must be submitted in 2025 for 2024," he says. "We therefore do not yet know how they will work.“

However, the GDV is also calling for sustainability reports to be streamlined. With 170 to 800 data points and many qualitative statements, these will be very extensive. Excessive reporting obligations could be limited to the company-specific materiality analysis. The standardised product information sheets prescribed under the SFDR should, according to GDV, only contain core ESG statements and thus become more consumer-friendly.

In parallel to the cross-sector ESRS, however, the European Financial Reporting Advisory Group (Efrag) has already been commissioned to deal with sector-specific standards. „It would be better to wait and see how the cross-sector standards affect corporate reporting," says Asmussen. „Only when there is a need for more specifics or extensions should the mandate for sector-specific standards be issued.“

The second point that could be implemented in the short term involves the Solvency and Financial Condition Reports (SFCR), which must be prepared annually as part of Solvency II. They are aimed at the public, i.e. analysts, journalists and also consumers. According to a GDV survey, the reports are accessed on average nine times a month per company from their websites. This is not expedient in view of the effort involved in producing the reports.

The GDV is therefore calling for the SFCR to be abolished and replaced by target group-orientated formats. Professional users could utilise comprehensive quantitative data that is already published in the appendix of the SFCR reports. For the general public, information on capitalisation (solvency) and a few other key figures on the website of the respective company would be perfectly adequate, the association believes. However, the Solvency II Framework Directive, which was revised as a result of the review and adopted by the EU Parliament in April 2024, already provides for a fundamental separation between the parts of the SFCR aimed at policyholders and those aimed at the professional public.

The GDV also identifies avoidable duplication of work in the case of climate risks. One result of the Solvency II review was that the climate impact assessment must be integrated into the company's Own Risk and Solvency Assessment (Orsa) in future. BaFin has already stipulated this for the German market, and the GDV supports this approach.

Another result of the review is the obligation for companies to draw up plans for dealing with climate risks. However, this overlaps with the Orsa process, and the GDV is in favour of implementing the climate impact assessment within Orsa.

The GDV sees protecting the interests of the small and medium-sized insurers as a mammoth task. According to the Accounting Directive, large companies are obliged to report on sustainability. To qualify as a large company, two of three criteria must be met: Balance sheet total (over 25 million euros), turnover (premium income over 50 million euros) and number of employees (over 250). The vast majority of insurers fulfil the criteria of balance sheet total and turnover – even those with very few employees.

The association is therefore calling for amendments. One option would be for a company to only be considered a large insurer if it fulfils all three criteria. However, this would require a lengthy negotiation, as the Accounting Directive would have to be amended.

Small and non-complex undertakings (SNCUs) will receive some relief following the Solvency II review. For example, they will have to disclose fewer key figures in their sustainability reports. „This proportional approach should also be applied to other regulations such as digital operational resilience (Dora)," said Asmussen, who emphasised that the aim was to ease the burden, not to exempt them from regulation altogether.