the terms of their policies. on the contrary, our responsibility, after the crisis we have experienced, is to better protect the rights of policyholders, and by that i mean all policyholders. the sole purpose of this measure is to enable us to protect french savers in the event of serious and exceptional threats to financial stability. if ever it were needed, we would be sure to use it appropriately and in the collective interest. ii. second major challenge for the insurance sector : the complete overhaul of the regulatory framework the solvency 2 directive came into force in the european union on 1 january this year after 10 years of difficult negotiations. despite what critics say, this overhaul of the regulatory framework was necessary. the previous framework, which dated back to the 1970s, was no longer adequate. it did not take into account the true nature of risks : capital requirements, for example, were independent of asset allocation. the new supervisory framework now includes requirements relating to governance, cooperation between european supervisors in the same group, reporting and transparency vis - a - vis the market. the principles of solvency 2 are not perfect but they do represent genuine progress : investment freedom in return for compliance with the " prudent person " principle, joint valuation of insurance assets and liabilities, and the taking into account of " long - term guarantees " to mitigate the effects of financial market volatility on capital. that said, there are a number of developments that would be desirable. a review phase of the standard formula and the long - term guarantee package is page 6 sur 7 scheduled at the european level for 2018 - 2020. this step provides an opportunity for improvement in at least three areas : - firstly, the simplification of the regulatory framework. the complexity of the standard formula is neither desirable for the industry which has to produce these new calculations, nor for supervisors, nor for financial markets. - secondly, insurers should remain a genuine lever for financing the economy. the insurance sector is the largest institutional investor in the european union, with almost eur 9, 800 billion invested in the economy in 2015. you have often brought this issue up with me... and it has now been clearly identified at the european level. there are already plans for improvements in two areas, upstream of the review phase : infrastructure corporates on the one hand – eiopa has proposed a revision ; highquality securitisation products on the other. more generally, it is essential to consider the potential deterrent

page 1 sur 7 8th international insurance conference : “ towards the insurance of tomorrow ” – paris, 14 october 2016 speech by francois villeroy de galhau, chairman of the autorite de controle prudentiel et de resolution and governor of the banque de france ladies and gentlemen, i am very happy to be here today for this 8th international insurance conference - the first to be organised under the aegis of the french insurance federation - and i would particularly like to extend my regards to the federation ’ s chairman, bernard spitz, as well as to its vice - chairmen. although i have met you all several times in the past year, this is the first time i have participated in an event in my capacity as chairman of the acpr, the autorite de controle prudentiel et de resolution. rest assured that at the acpr, i indeed we - regard the insurance sector as every bit as important as the banking sector. with a total of 826 licensed firms in france in 2015, oversight of the insurance sector is a vital part of our mission to safeguard financial stability – which, alongside monetary strategy and the provision of services to the economy, forms part of my threefold mandate as governor of the banque de france. page 2 sur 7 as supervisors, we are concerned on a daily basis with the theme of this conference : the insurance industry of tomorrow. indeed, given the speed at which things are evolving, tomorrow ’ s insurance landscape is already very much present today. among the many changes you are being forced to adapt to – technological, environmental, macroeconomic and regulatory – i would like to look in particular at two key challenges : the persistent low interest rate environment, and the profound changes to the regulatory framework with the entry into force of solvency 2. * * i. first, the challenge of low interest rates on this issue, it is important not to lose sight of the broader picture : low rates are not solely the result of monetary policy, they are also a consequence of the global savings glut ; and the current low rate environment is not just having negative effects, it is also producing benefits that should not be underestimated. if the ecb had not acted to lower interest rates, we would have even lower inflation today – and the deadly threat of deflation - and less growth in france and europe. this would be detrimental for insurers as well as banks. in addition, low rates are having a direct positive impact on