The European Union’s Solvency I regulations, or the requirements for the amounts of regulatory capital that insurance undertakings must hold against unforeseen events, were sufficiently bland to be almost ineffective.

The idea was to harmonise rules on insurance, but vagueness is not generally good regulatory policy, which is why the rewrite, Solvency II, has become a major undertaking with possible real estate market implications. The final detail of this rewrite is not yet known, which is why the implications for real estate investing are also not yet completely clear.

The worry is that changes embodied in Solvency II could restrict the insurance sector’s involvement in European real estate markets. While that might be a long-term concern, at first glance a pull-back from property markets has not been the response of insurers, which have been merrily rolling along in a state of Solvency II preparation.

“We already live in a Solvency II framework,” decl