Economist Insurance Summit on 1 March 2012 saw the release of another report speculating on the impact of Solvency II – Insurers and Society: How regulation affects the insurance industry’s ability to fulfil its role. The report is based on a survey conducted by the Economist Intelligence Unit on behalf of BNY Mellon. Amongst other conclusions, it stated that, “Insurers are likely to shift their portfolios down the risk spectrum.” The survey showed that this shift could include reduced risk appetite for alternative investments such as private equity and hedge funds. This conclusion seems reasonable given the higher capital charges currently proposed for alternative investments. The survey was conducted in January 2012 and included a sample of 253 insurers, financial institutions and corporates. Respondents expected to see a reduction in the risk appetite for investment in hedge funds (45% reduce vs 8% increase) and private equity (37% reduce vs 14% increase). Looking at the responses of insurers only showed similar result for hedge funds (47% reduce vs 6% increase) but were less conclusive for private equity (29% reduce vs 24% increase). However, another report released earlier this year – Balancing Risk, Return and Capital Requirements – came to the almost opposite conclusion, stating as one of its findings that, “Allocation to alternatives are set to increase”. This report was based on survey conducted by the Economist Intelligence Unit on behalf of BlackRock. The survey of 223 insurers was conducted in the Autumn 2011. Respondents said their holdings were likely to increase overall for both hedge funds (9% reduce vs 32% increase) and private equity (6% reduce vs 32% increase). That surveys can produce different results on the same topic should not be news to anyone. These two surveys were conducted at different times and had different samples. Notably respondents to the BNY Mellon survey were not restricted to the insurance industry. The point is that in many cases we can’t tell for certain what the effects of Solvency II and other regulations will be. Indeed, the range of views expressed at a session on risk and investment at the summit reaffirmed this. What’s more, two major reports by the BIS and IMF published last year both called for more research into the impact of Solvency II on capital markets and the insurance industry. Surveys offer valuable insights into the attitudes and thinking of market participants, but they can also shape public opinion and steer the debate on regulation. The example from the two surveys highlights just how undecided market participants are about the effects of Solvency II: all the more reason for their results to be examined critically.