The Solvency II Experts News

The CRO forum just released an internal models benchmarking study which characterises the current and anticipated future state of internal economic capital frameworks, models and governance, including planned design enhancements, implementation progress and overall use of models. The study presents the survey findings in the context of Solvency II requirements.

Click here to download a copy of this study.

CEIOPS announced the publication of its Report on the outcome of the stock-take exercise on the current use of internal models in insurance, following its’ approval in the Members’ Meeting of January 21st, 2009.

The report is the result of an exercise initiated in late 2007 by the CEIOPS’ at the request of the European Commission.
The stock-take exercise itself and the report itself have fully delivered on their initial purpose, significantly improving supervisors’ understanding of current industry practices on internal models and fostering discussions about the application of models both for risk management and regulatory purposes.
Also, the exercise provided CEIOPS with the information it needed for the preparation of its proposals for the Level 2 implementing measures for the Solvency II Framework Directive Proposal (in respect of Internal Models).
The data available in this report was collected by CEIOPS from industry associations, rating agencies, banking and insurance supervisors, consultants and firms themselves. CEIOPS would like to highlight the fact that parts of this ‘factual’ report clearly need to be understood as a reflection of state of play of internal models at a given point in time and that industry practices of internal models use are evolving. Click here to download this report 

The adoption of the Framework Directive at EU level is awaited with anticipation, as the most important principles will be laid down in it. For as soon as it has been adopted, implementing measures will need to be established. CEIOPS is already drafting initial proposals.

Dutch health insurers are challenged by art. 101.5 of the draft Solvency II directive which requires them to “take account of the effect of risk mitigation technique” when they calculate their SCR for compulsory private health insurance . Calculations under QIS 4 indicated that the SCR would double existing solvency requirements for this insurance compartment. This article provides an overview of the Dutch Compulsory private health insurance and of the QIS3 and 4 results relating to it. Click here to read full article.

The CEA, the European insurance and reinsurance federation, today set out the key issues that have been highlighted by insurers as a result of last year’s QIS4 exercise, the fourth quantitative impact study run by the Committee of European Insurance and Occupational Pensions Supervisors (Ceiops) as part of the Solvency II project.

In a paper submitted to Ceiops, the CEA sets out the issues that the industry would like to see addressed in the development of possible QIS5 technical specifications and, ultimately, the implementing measures for the proposed Solvency II Framework
Directive.

Among the issues, the CEA highlights the need for more analysis on the calculation of technical provisions and the calibration of some solvency capital requirement
(SCR) models. It also calls for more work to be done on how to apply the proportionality principle in Pillar I.

“We appreciate the high quality of the work done on Solvency II and the good cooperation we have had with Ceiops and the European Commission,” said Alberto Corinti, deputy director general of the CEA. “We hope that our paper will prove helpful as we tackle the issues that require further work.”

The high level of insurance industry participation in QIS4 demonstrated insurers’ commitment to the Solvency II regime. The industry remains firmly convinced that Solvency II will bring significant benefits to both insurers and consumers.

“The CEA looks forward to cooperating closely with Ceiops to ensure that the implementing measures do not depart from the economic risk-based principles that lie at the heart of the regime and that the Solvency II timetable is not delayed,” said
Corinti.

Click here to download full paper.