This paper focuses on the role of insurers as providers of funds for long-term investment in the real economy, with an examination of the European market. The thesis is that financial regulation, and prudential insurance regulation in particular, crucially affects insurers’ investment behavior and therefore their contribution to financial stability and economic growth, which for many reasons will be increasing in the near future. Accordingly, careful assessment of the effects of Solvency II on the insurance industry is required, bearing in mind the regulatory review planned for 2018.

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