KMPG has become the latest industry voice to raise concerns over the impact Solvency II rules could have on economic growth.

In a report, Evolving Insurance Regulation, published yesterday, the consultants said the new Europe-wide rules could also negatively affect the pensions market by making annuities uneconomical for insurers.
The European Commission should re-examine its proposals for charges on investment products and carry out another quantitative impact assessment, KPMG said.
According to KPMG, the two issues which will have the greatest impact on firm's capital requirements - and therefore the annuities market - are the final requirements under Solvency II for the matching premium and counter-cyclical premium. Together, these determine the way insurers' liabilities are calculated.
Phil Smart, UK head of Solvency II at KPMG, said: 'In the UK, this could mean that the return on annuities falls to a level which consumers find unacceptable. Insurance firms may then decide such business is uneconomical.
'This in turn would be unwelcome news for pensioners, who could be forced to accept the investment risk on their pensions savings, as insurers will increasingly be expected to offer unit linked pension products.'
In the report, KPMG also highlighted the key role insurers have in the bond market and the investments they have made in infrastructure and real estate funds. These provide 'reliable and stable' cash flows which are a good match with the cash flows on annuity type products, it said.
Mr Smart added: 'By imposing high capital charges on these investment classes for regulatory purposes, the risk-adjusted returns may become unattractive and insurers needing additional solvency will likely choose to change their investment portfolios.
'This could potentially lead to new funds for investment drying up, which could impact the wider European growth agenda.'
The concerns raised in the report over how Solvency Ii could affect the annuities market echo concerns raised by the director general of the Association of British Insurers, Otto Thoresen, lastweek.