The UK Treasury is seeking views from the insurance industry on the final provisions through which it will incorporate new EU-wide solvency and risk management rules into national law.
The short consultation, which will close on 19 September 2014, sets out the UK’s proposed approach to the ‘volatility adjustment’, which is intended to protect insurers with long-term insurance products from artificial fluctuations in volatility; and to removing firms’ regulatory permissions if they do not meet minimum capital requirements under the new rules. The consultation was due to take place in 2011, but was held back pending EU authorities’ delayed final approval of the new regime. The new EU directive came into force in May of this year and EU countries usually have two years to transpose directives into national law.
Continue Reading “UK Treasury Consults on Final Solvency II Implementation Measures” at Out-Law News
LONDON, Aug 13 (IFR) – The European Commission has lowered capital charges for insurers and pension funds investing in securitisation making it less punitive for them to hold the asset-class, according to a final draft circulated among member states.
The EU’s main authority is set to publish proposals implementing capital requirements for the sector, under Solvency II, by the end of September. Co-legislators from the European Parliament and the Council of EU states will then have a maximum six months to either approve or reject them in full.
Continue Reading “EU Commission to Ease Solvency II Charges in September Proposal” at Reuters News
Many UK-based general insurers could benefit from outsourcing their actuarial function as they prepare for Solvency II to avoid the cost of the extra expertise needed, actuaries and consultants OAC has said.
The European Union’s upcoming Solvency II capital rules require all insurers to have an actuarial capability to help them assess their liabilities. However, OAC warned many firms will not have enough assets under management to allow them to meet the cost of the extra regulatory obligations.
Its examination of a sample of 28 firms and found 17 had assets under management – the market value of the firms’ assets – of under £150m.
Continue Reading “Solvency II: Small Insurers ‘could cut costs by outsourcing actuaries’” at The Actuary News
In a recent interview with:
- Bruce Porteous, Investment Solutions Director, Standard Life Investment
- René Knapp, Group Chief Actuary, UNIQA Insurance Group
- Werner Müller, Chief Financial Officer and Chief Risk Officer, Allianz Elementar Versicherung, Austria
Clear Path Analysis tried to get to the bottom of the challenges insurers face in preparing their asset liability management programmes for Solvency II’s higher capital requirements with some interesting replies…
What fresh challenges should insurers be prioritising solutions for and why?
Bruce Porteous: There are a number of challenges coming through given that Solvency II implementation is not far off. One of the biggest, though, is developing asset strategies and mixes to ensure that, under the new Solvency II regime, assets are as optimal as they can be. There are new assets receiving preferential treatment through things such as the matching adjustment; largely infrastructure, commercial mortgages and also multi-asset funds designed to be optimal, from a capital point of view, under Solvency II. In summary there is substantial work just on the assets side and sourcing some of these assets is equally going to be quite tricky.
Continue Reading “Preparing your AML Programmes for Solvency II’s Higher Capital Requirements” at Total Asset News
Captive insurers are making good progress in preparing for Solvency II and are defying predictions that they would leave the European Union for domiciles where the risk-based capital rules will not apply.
Solvency II, the European Union-wide risk-based capital rules for insurance and reinsurance companies that will come into force in January 2016, will be applied to captives using the “principle of proportionality” to take into account the relative size and complexity of captives.
That proportionality likely will mean that national regulators would impose lighter reporting requirements on captives than on commercial insurance companies, for example, said Gerry Connell, vice president of Marsh Management Services (Dublin) Ltd.
Continue Reading “Captive Insurers Stick with E.U. Domiciles Despite Impending Solvency II Rules” at Business Insurance News
In the Solvency II world, there will be increased focus on management reporting and analytics. This is partly driven by Article 132 of the Solvency II Directive, which requires that companies only invest in assets and instruments that can be properly identified, measured, monitored, managed, controlled and reported.
This means fundamental changes to how Risk Management and Compliance functions are carried out and will require an increase in spending on risk and performance analytics in order to improve their capabilities in this area.
QRT reporting, a specific asset-reporting requirement will entail real granular detail, regardless of whether company outsources or manages the fund administration internally and asset-reporting solutions around risk and reporting data will be key to meeting this requirement.
Continue reading “More Spending Required for Life Insurers to Meet Pillar 3″ at Actuarial Post and view the full report by FRS Invest Pro HERE.
In a poll of 77 senior executives, including chief actuaries and chief risk officers working in the UK general, life and health insurance markets, Grant Thornton found that almost two-thirds (65%) believe the value added by the new requirements will not justify the expenses incurred.
Three-quarters considered the costs of Solvency II to be disproportionate, while only 6% of respondents believe the costs to implement the new regulation is reasonable.
Simon Sheaf, head of actuarial and risk at the firm, said: ‘Increasingly, the sector is begrudgingly accepting Solvency II as a “necessary evil”, and recognising that it will bring some benefits.
Continue Reading “UK insurers regard Solvency II ‘as a necessary evil’” at The Actuary News
Zurich Insurance has deployed a mobile business analytics tool to help minimise the complexity of meeting insurance industry regulations and ensure transparency of its operations.
The iPad app was developed in a few weeks using Microstrategy’s Mobile platform, integrating internal reports and Solvency II data to aid compliance with capital risk management rules.
The app allows Zurich Insurance controllers and management staff to analyse yearly trends on global claims data, with dashboards to view information by time period, geography or line of business using actuarial methodologies.
Continue Reading ” Zurich Insurance Deploys Mobile Analytics to meet Complex Regulatory Demands” at Computer World UK News
Insurance companies are well placed to fill a $500bn annual gap between infrastructure investment needs and the lending available from traditional sources such as banks, according to research published by S&P RatingsDirect.
Credit analyst Marco Sindaco in London notes in his latest analysis that there is an estimage of $3.4trn in annual infrastructure investment needs through 2030, and it is to these needs that there is an ongoing gap in funding.
However, insurance companies with long term liabilities can see benefits in ties to infrastruture projects, which are long term in nature, and designed to provide broader economic benefits.
A key question in this relationship arises because of regulatory developments. This causes uncertainty for long term investors, and requires analysis of the impact on the insurance company’s financial strength and capital structure.
However, through additional research involving S&P and the Judge Business School at Cambridge University, it has been found that regulatory developments such as Solvency II in the EU will not necessarily cause problems for insurance companies seeking to invest in infrastructure.
Continue Reading “S&P Delivers Verdict on Insurer role in Infrastructure” at Investment Europe News