The Solvency II Experts News

The CRO Forum companies have developed internal capital models, which they expect
to be approved by the regulators as a basis for setting the level of target capital
(“SCR”). The CRO Forum companies have also participated in QIS4.

The CRO Forum asked Towers Perrin to repeat the benchmarking study for QIS4. The
benchmarking was undertaken through a comparison of the results of internal models
and those resulting from the QIS4 submissions from CRO Forum members, both for
solo entities and for groups.

The objectives of the study are as follows:

• Compare the capital requirements produced by CRO Forum members’ internal models
  with those calculated according to the standard approach defined for QIS4.
• Obtain insight into the causes for differences between the standard approach under
  QIS4 and internal models.
• Identify any inherent conservatism/optimism in the QIS4 calibration, or potential
  problems in methodologies proposed by the Commission.

Click here to download this study

Interim Solvency II experts are commanding £800 per day in the UK and
€1000 across Europe as a whole.  These figures are still rising as demand
spirals.  Permanent position candidates with knowledge of Solvency II have
also gained increased bargaining power.  These candidates are automatically
achieving pay levels in the upper quartile of contemporaries’ salaries – CROs with Solvency II knowledge can command up to £250,000 in the UK and €270,000 across the rest of Europe.  Even in today’s markets, they’re looking at bonuses of around 60%. Click here to read full article

 In a press release, CEIOPS has welcomed the risk oriented approach for the
 supervision of insurance undertakings. It considers that the current financial
 crisis indicates the appropriateness of such an approach. However the
 dimension of the crisis is unprecedented in recent years. Without
 considering amendments to the architecture of Solvency II, CEIOPS now
 starts reflecting on lessons to be learnt for the proposed regime, with a view
 to any strengthening of the focus on financial stability, and any further
 convergence as a Level 3 Committee in the Lamfalussy process.
 To ensure avoiding both disturbance of the approval process of the Level 1 Directive, and duplication of existing work by CEIOPS and other bodies, this review work is being centrally coordinated within CEIOPS for those purposes. It is being targeted at “lessons learned” and Level 2 (Implementing Measures). CEIOPS’ intention is that such lessons should lead to improving the global framework, towards making it adequate and workable both in normal as well as in crisis times.

CEIOPS has welcomed the risk oriented approach for the supervision of insurance undertakings. It considers that the current financial crisis indicates the appropriateness of such an approach. However the dimension of the crisis is unprecedented in recent years. Without considering amendments to the architecture of Solvency II, CEIOPS now starts reflecting on lessons to be learnt for the proposed regime, with a view to any strengthening of the focus on financial stability, and any further convergence as a Level 3 Committee in the Lamfalussy process.

To ensure avoiding both disturbance of the approval process of the Level 1 Directive, and duplication of existing work by CEIOPS and other bodies, this review work is being centrally coordinated within CEIOPS for those purposes. It is being targeted at “lessons learned” and Level 2 (Implementing Measures). CEIOPS’ intention is that such lessons should lead to improving the global framework, towards making it adequate and workable both in normal as well as in crisis times.

The Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) presented to its stakeholders the main preliminary results of the fourth quantitative impact study (QIS4) conducted in the framework of the Solvency II project. The final report will be presented at CEIOPS’ Annual Conference on 19 November 2008 in Frankfurt. Click here to read the full article.

 AXA Insurance chief executive Philippe Maso has warned that the plan to overhaul
 regulation of European insurers must be revisited in the wake of the global
 financial turmoil.
 As governments scrambled to nationalise banks and financial services stocks
 began to rally this week, Maso questioned the accounting rules that form a key
 plank of Solvency II, the European directive on insurers’ capital adequacy due to
 come into force in 2012.
 Click here to read full article.

Peter Skinner (MEP) declared in an interview “We are still waiting for the consultations from the Commission to see what kind of differences need to be included in the new IORP proposal, not inside the Solvency II framework”.

Skinner added: “Insurance and pensions are different industry in many respects and I believe there are dangers in trying to drag pensions under the same regime.
“The consultation will apply only to the article 17 area which looks at those pensions which are insurance backed.” Click here to read full article

 The CEA, the European insurance and reinsurance federation, has welcomed
 today’s vote in the Economic and Monetary Affairs Committee of the European
 Parliament on the Solvency II Framework Directive.

 “The CEA welcomes the text approved by the Committee and supports the
 decisions reached by MEPs on group support and the minimum capital
 requirement,” said Michaela Koller, director general of the CEA. “Solvency II is based on
 a modern approach to enhanced risk management, increased transparency and pan-European oversight. This already provides a response to likely future calls for changes in regulation as a result of the current market turmoil.” Click here to read full article.

 The Economic and Monetary Affairs Committee backed
 plans for a major overhaul of the supervisory framework
 that enhances the financial stability of the insurance
 industry on Tuesday when it adopted its first-reading
 position on the Solvency II directive.
 MEPs voted to make significant changes to the
 Commission’s proposal in areas such as group supervision
 and the calculation of capital requirements.

 Click here to read full article

 As debate on the draft Solvency II Framework Directive reaches a crucial stage
 in the European Parliament and the EU Council of Economic and Finance Ministers, and against the background of the current financial turmoil, the CEA, the European insurance and reinsurance federation, has reiterated its firm belief that an advanced system of supervision that monitors insurers at group level is essential in the proposed solvency regime.

“While it is obviously still too early to learn definitive lessons from the current problems in the world’s financial markets, one message is clear: a piecemeal approach to the supervision of large financial groups does not work,” said Michaela Koller, director general of the CEA. “Regulatory and supervisory regimes must reflect the risk and capital management of the entities they oversee.”
 
“This is crisis prevention, pure and simple. The future Solvency II regulatory regime must be able to identify the consolidated exposures of insurance groups and, in this context, supervisors should be able to act in cooperation. If Europe’s insurers are to be encouraged to develop internationally, European regulatory and supervisory approaches cannot lag behind,” insisted Koller.

The CEA has long argued that appropriate group supervision ultimately increases policyholder protection and at the same time facilitates the optimum allocation of capital.

“The Solvency II proposal, including the group support regime, offers a unique opportunity for aligning supervision to risk and capital management, based on a clear framework for supervisory cooperation and coordination. In shaping the regulatory structure of the future for Europe’s insurers, European law-makers must not lose sight of the economic realities of the markets they regulate,” Koller added.