LONDON (Reuters) - Insurers in the European Union will not have to set aside as much capital to cover investments in infrastructure under a reform aimed at channelling more funds into growth.
The cut in capital charges for insurers wanting to invest in digital networks, transport and other infrastructure projects will be cut from April 2, the EU's executive European Commission said.
Less than 1 percent of total assets of insurers in the EU is invested in stakes or loans to infrastructure projects.
The so-called risk calibration - a percentage figure that determines how much capital must be set aside - for investment in unlisted equity shares has been cut to 30 percent from 49 percent.
Risk charges for investments in infrastructure debt has been cut by up to 40 percent.
The reform is part of the EU's Capital Markets Union project to encourage more market-based financing of the economy and reduce the bloc's dependence on banks for funds.
The changes announced on Friday were made to the bloc's insurance capital rules known as Solvency II, which only came into effect in January.
"However, more still needs to be done through the Solvency II review process, because even after these improvements, Solvency II will still exaggerate the risks involved in long-term investment," said Olav Jones, deputy director general of Insurance Europe, an industry body.
"In addition, more needs to be done to ensure that there is a suitable pipeline of infrastructure assets," Jones said.