Keynote speech for AAE's European conference of actuaries

Good morning, Matthias, distinguished guests, dear actuaries, dear colleagues,

It is a pleasure to join you today at the European Congress of Actuaries. I would like to thank the Actuarial Association of Europe, the organisers, and all of you for bringing together such a rich professional community.

This Congress takes place under a powerful theme: United in Diversity.

For Europeans, this phrase carries a strong meaning. It speaks to our Union, to our different languages, traditions, institutions and histories. But for actuaries, it can also carry a more practical and methodological aspect. 

In many ways, Europe itself resembles a diversified portfolio. Diversity can strengthen resilience and reduce risk — but only when we understand the relationships within it. A portfolio works because we study how risks interact: when they move independently, when they move together, and when they can amplify one another.

Europe resembles such a portfolio. We have different national insurance markets, different social systems, different supervisory traditions and different risk cultures. That diversity gives Europe strength. It brings knowledge, innovation and resilience. But there are also risks. Today, many of the risks we face cross borders. They move through financial markets, digital networks, supply chains, climate systems and households.

And this leads to the central idea I would like to explore today: In a risk society, Europe does not need uniformity. But Europe does need unity. It needs the capacity to see risks together, to understand them together, and to act together.

This idea matters deeply for the actuarial profession. Actuarial work does not stop at calculation. It turns uncertainty into informed decision making. Reserves, pricing, capital and prevention all serve this purpose. They help insurers honour long-term promises. They help supervisors assess whether undertakings can absorb shocks. And they strengthen the systems on which citizens rely when life becomes uncertain.

This role becomes even more important because risk now shapes our societies in deeper ways. Risk no longer appears only at the margins. It increasingly influences how economies function, how undertakings prepare, and how citizens experience uncertainty.

Climate change increases the frequency and severity of natural catastrophes. Cyber risk turns digital dependence into an operational vulnerability. Artificial intelligence promises efficiency and personalisation, but also raises questions about governance, fairness and accountability. Geopolitical fragmentation affects energy prices, inflation, supply chains and market valuations. Demographic change tests pension systems and long-term savings. 

These risks differ in nature. But they share one important feature: they interact.

In a world of interconnected risks, society needs professionals who understand uncertainty, model complexity and challenge assumptions.

But no profession can carry this responsibility alone. No insurer can diversify global shocks alone. No national supervisor can see every cross-border exposure alone. No Member State can build resilience if the risks around it become systemic. The answer to this must come from coordination.

This is where the theme of this Congress becomes a guiding principle.

United in Diversity means that Europe can respect national specificities while building a common capacity to manage shared risks.

Europe’s insurance market is not uniform. It brings together different national markets, business models, legal systems and supervisory traditions. That diversity must rest on a common foundation: strong protection for policyholders across the Union, a level playing field for insurers, and supervisory tools that can be of use when risks cross borders.

This is why EIOPA’s Strategy towards 2030 places such emphasis on supervisory unity.

Supervisory unity means creating a European mindset in supervision. It means that EIOPA and national supervisors work as one community, with shared objectives, common standards and the capacity to respond consistently. It means that we harmonise where possible and centralise where needed.

This also connects directly with our three strategic priorities.

First, Single Market integration must be strengthened through high-quality, convergent supervision.

Second, market and societal resilience must grow in the face of interconnected risks, from natural catastrophes and cyber threats to demographic pressures and health-related challenges.

Third, regulation must become simpler, bolder and faster: supporting effective supervision, reducing unnecessary complexity, and making better use of data and supervisory technology.

These priorities all lead to the same point: Europe needs smarter supervision. Not heavier supervision for its own sake. Not lighter supervision for its own sake. Smarter supervision: proportionate where risks remain limited, robust where risks become systemic, and united where risks cross borders.

Let me now apply this approach into three practical areas: Solvency II, simplification and proportionality, and artificial intelligence.

[SOLVENCY II]

The first area is Solvency II.

For more than a decade, Solvency II has given Europe a common prudential language. Capital requirements, governance and market discipline have all become more closely connected to risk. Through periods of stress, this common framework has helped preserve confidence in the European insurance sector.

The review of Solvency II now brings Europe into a new phase. Policymakers have made important decisions. The framework will include more proportionality, changes to long-term guarantee measures, stronger macroprudential tools to address liquidity vulnerabilities and sector-wide shocks, a stronger approach to sustainability risk management through sustainability risk plans and climate scenarios in the ORSA, as well as streamlined reporting and disclosure. However, the fundamentals of Solvency II remain valid. The review only refines them.

EIOPA is prepared to implement this updated framework. The task now is to turn the revised rules into effective practice: through close cooperation with national supervisors and the industry, through updated technical standards and guidelines, and through continued supervisory convergence.

At the same time, the prudential balance deserves clear attention.

EIOPA will approach implementation with an active and constructive mindset.

The use of the capital release will be monitored closely, including changes in investment behaviour and distributions to shareholders. EIOPA’s first report will follow by the end of 2028.

The right approach is responsible simplification: reducing unnecessary burden while preserving the tools that allow supervisors to detect risks early and protect policyholders. In a risk society, capital frameworks cannot look only at yesterday’s risks. They also need to prepare the sector for tomorrow’s risks.

This is the balance that will define the next phase of Solvency II. The framework must remain strong enough to capture new and interconnected risks. 

[SIMPLIFICATION}

This brings me to the second area: simplification, burden reduction and proportionality.

We fully support the objective of simplification. Europe needs a regulatory framework that allows businesses to thrive, innovate and compete. Insurers should not face unnecessary administrative burden. Smaller and less complex undertakings should not carry obligations designed for much larger or more complex groups. Supervisors should not collect data that they do not need. And regulation should not become so complex that only specialists can navigate it.

For EIOPA, simplification does not mean lowering ambition. The goal is a framework that becomes clearer, more proportionate and more effective. Unnecessary burden should fall, while supervisors retain the tools, they need to detect risk. Above all, simplification should reduce fragmentation, not move burden from the European level to twenty-seven national levels.

This distinction matters.

Europe can simplify in two very different ways. It can remove unnecessary requirements, streamline reporting, shorten guidelines and make proportionality work better. That path supports competitiveness and resilience.

Or it can simplify at EU level while creating new national divergences, new interpretations, new supervisory uncertainty and new reporting requests. That path does not reduce burden. It merely moves it.

We should choose the first path.

A stronger Single Market requires less fragmentation, fewer duplications and more predictable rules. Effective supervision also requires sufficient data. Otherwise, supervisors may lose the ability to detect risks early, or they may need to rely on more ad hoc requests later. Faster action therefore depends not only on cutting requirements, but also on addressing the structural choices that make European regulation complex in the first place.

Under Solvency II, EIOPA has worked on reducing reporting requirements. The revised reporting package includes reductions in the frequency of certain templates, deletion of some annual templates, greater use of proportionality and technical simplifications across the framework. 

EIOPA has also started to streamline our guidelines. Shorter, clearer Level 3 texts can reduce unnecessary complexity while preserving convergence. We want guidance that adds value, not guidance that repeats what the law already says.

And proportionality now becomes even more central.

The revised Solvency II framework introduces the category of small and non-complex undertakings. These undertakings can benefit from simplified requirements through a lighter process. The framework also allows supervisors to grant certain proportionality measures to other undertakings when their nature, scale, complexity and risk profile justify such treatment.

This is the right direction.

EIOPA will support the consistent implementation of the new proportionality framework. Supervisors and undertakings will need clear criteria for identifying small and non-complex undertakings. Convergence will be essential, so that proportionality does not become another source of fragmentation. The objective remains clear: less unnecessary burden, without any reduction in policyholder protection. 

This also explains our view on possible further legislative initiatives.

Solvency II has just gone through a comprehensive review. Stakeholders contributed extensively. Policymakers reached a final balance. Now Europe should focus on implementation. Reopening files too quickly could create uncertainty and run counter to the very purpose of simplification. The insurance sector needs clarity, stability and predictability to plan, invest and serve policyholders.

This does not mean that improvements should stop. On the contrary, simplification will continue within EIOPA’s remit. 

But it’s important to simplify with a compass, not with an axe.

The compass points toward a stronger, more coherent and more competitive European insurance market. The axe may cut useful tools together with unnecessary burden.

[ARTIFICIAL INTELLIGENCE]

The same question of balance arises with artificial intelligence.

AI has already entered insurance. It supports claims management, fraud detection, customer interaction, underwriting support, document processing and software development. It can improve efficiency. It can make products more tailored. It can help insurers communicate more clearly with consumers. It can also help supervisors identify patterns and emerging risks earlier.

But AI also changes the governance of risk.

AI can amplify existing weaknesses in data quality, outsourcing and governance. It may also create new dependencies on third-party providers, challenge explainability, and affect pricing of, and access to insurance products. Once firms deploy AI across borders, differences in national interpretation can quickly become Single Market problems.

EIOPA supports the objectives of the AI Act. Europe needs trust in artificial intelligence. Citizens need protection against harmful uses. Firms need clarity. Supervisors need coherent tools.

But the AI Act will not operate in an empty space. Insurance already has sectoral legislation. Solvency II addresses governance and prudential soundness. The Insurance Distribution Directive addresses conduct and consumer protection. DORA addresses digital operational resilience. Supervisors already oversee many of the risks that AI can generate or amplify.

Therefore, Europe must manage the interplay between the AI Act and insurance legislation carefully.

In particular, it’s important to have clarity on the scope of application. Insurance undertakings have used actuarial and statistical models for decades. Generalised linear models and generalised additive models play an important role in risk assessment and pricing. These models often rely on stable parameters. They provide a high degree of explainability and transparency. Firms and supervisors understand their risks well. They usually operate within established actuarial governance frameworks, with validation, human oversight and model control.

Such models do not raise the same governance concerns as opaque, complex, self-learning systems. 

This point matters especially for actuaries. If we treat transparent actuarial models and black-box AI systems in the same way, we risk creating burden without improving protection. If we distinguish them clearly, we can focus supervisory attention where the risks truly lie.

This does not mean that traditional models deserve no scrutiny. Pricing models can still create unfair outcomes. Data choices can still affect access. Assumptions can still fail. But the regulatory response should reflect the actual risk profile of the tool.

That is the essence of risk-based regulation.

The same principle should guide the designation and coordination of authorities. Financial supervisors understand insurance markets, insurance legislation and actuarial models. Where the AI Act applies to supervised financial institutions, authorities need effective coordination. Europe should avoid institutional fragmentation. It should not ask firms to explain the same model to several authorities under several overlapping frameworks without clear responsibilities.

Innovation needs trust. Trust needs clarity. Clarity needs coherent supervision.

This is also where actuaries can make a major contribution. The profession has long worked with model risk, data quality, assumptions, validation, documentation and professional judgment. These skills will matter even more as AI becomes part of insurance value chains.

Let me now return to the broader picture.

Europe faces a risk society. But it has the potential to build a resilient society.

A resilient society that is better prepared for risks, can absorb them and learns from them. The society which protects citizens when shocks occur. And it prevents local vulnerabilities from becoming systemic failures.

The insurance and pensions sectors play a central role in protecting people. They help businesses recover, mobilise long-term savings, and invest in the economy. Finally, insurance and pensions are among the building blocks of resilience.

Resilience does not mean living in a world without shocks. It means building systems that can prepare, absorb, recover and adapt, while preventing local vulnerabilities from becoming systemic failures. 

And to maintain trust, sound prudential rules, fair conduct, strong governance, transparent products, consistent supervision and professionals — including actuaries — who combine technical excellence with public responsibility are needed.

This brings me back to the portfolio metaphor that I mentioned before.

Europe’s diversity gives us many assets: different experiences, markets, skills and institutional traditions. But a portfolio does not become resilient by diversity alone. It becomes resilient when someone understands the correlations, monitors the exposures and acts before concentration becomes crisis.

That is our shared task.

In the years ahead, Europe will face faster, more connected and more uncertain risks. But it also has extraordinary strengths: deep expertise, strong institutions, committed supervisors, innovative firms and a highly skilled actuarial profession.

If we combine these strengths, diversity will not divide our response. It will enrich it.

And if we keep trust at the centre, Europe can move from risk society to resilient society, with insurance and pensions helping people face uncertainty with confidence.