Securitisation – Those who forget the past are doomed to repeat it

SIU FUTURE STEPS Supervisory Authorities, which analysed capital requirements and their impact on insurers’ investment behaviour. The findings show that the current capital requirements align with the risks of securitisation investment and capital requirements are indeed not the primary obstacle holding back investments. A key issue is that securitisation products often do not align well with insurers’ long-term liabilities. Life insurers, for instance, require assets that provide predictable long-term cash flows. However, securitised products are often structured in ways that make them less suitable, creating a mismatch that complicates asset-liability management. PETRA HIELKEMA Chairperson – European Insurance and Occupational Pensions Authority (EIOPA) Furthermore, insurers often perceive securitisation as less attractive compared to other asset classes due to its risk-return profile. Its complexity further serves as deterrent. Unlike simpler fixed-income products, securitisation requires specialised expertise, increasing management costs and perceived risks – especially for insurers lacking in-house expertise. Finally, any change to the regulatory framework to reduce the capital charge for investment in securitisation would affect only some insurers, namely those using the standard formula to calculate their capital requirements. Since large insurers – who are the most significant players in the market–use internal models, changes to the standard formula are...