In response to the high rates of inflation, the ECB decided to move away from the ultra-loose monetary policy it had been pursuing for many years. Although life insurers and providers of old-age pension products had long hoped for interest rates to change, there are pros and cons to the increase: on the one hand, rising interest rates mean that companies are less burdened by additional interest reserves. On the other, the majority of the industry’s capital investments have been in fixed-interest securities with long terms, which will result in hidden liabilities on their books.
Additionally, life insurers have to fall in line with new regulatory requirements, as the EU is pressing forward with a complex regulatory framework in terms of sustainability. The implementation of the EU Sustainable Finance Action Plan has made extensive adjustments necessary. This ties up considerable resources, yet also presents tremendous opportunities, as customers are increasingly interested in sustainable insurance solutions.