The EU’s top insurance watchdog yesterday warned against giving insurers strong enticements to invest in particular asset classes, saying this would run counter to prudent supervision.

“We need to emphasise continually that undue incentives to buy any asset class should not be part of a risk-based, prudent regime,” Gabriel Bernardino said in the text of a speech to a financial conference.

European politicians want insurers to put more of their €8.5 trillion in assets under management into investments that will boost the bloc’s economy, which is in the doldrums.

Big insurers like Allianz, Axa and Generali have been looking for opportunities to make long term investments, such as in infrastructure or clean energy, that match their commitments to policy holders often decades in the future.

But insurers say European capital rules coming into force in 2016 make it too expensive for them to invest in these assets and are pushing for a better deal from regulators.

Insurers complain that infrastructure investments in the so-called Solvency II rules could face capital buffer charges of up to 70 per cent, while real estate investments are much lower, at around 25 per cent.

Bernardino, who is chairman of the European Insurance and Occupational Pensions Authority (EIOPA), said insurers did have a role to play in fostering sustainable growth in Europe and they must not focus on the wrong argument.

“Solvency II stand-alone risk charges are not the appropriate measure because diversification benefits need to be taken into account,” he said, adding that marginal capital requirements were a better test.

“If we base our analysis on the marginal return on regulatory capital, investments in high quality securitisations, infrastructure debt and private equity are, at least on a relative basis, quite attractive,” he said.