Tag Archives: EU

British regulator to focus more on protecting insurance policyholders

LONDON, March 20 (Reuters) – The Bank of England said it
will devote greater effort to ensuring more consistent
protection for those who would suffer most if their insurance
policies do not pay out as promised. The move follows a review by the central bank’s Independent Evaluation Office (IEO), published on Monday, which looked into
how the BoE’s supervisory arm, the Prudential Regulation Authority (PRA), ensures that policyholders are properly protected. PRA work on the issue had been “crowded out” by “live supervisory issues” and the need to implement European Union capital rules known as Solvency II by January 2016, the IEO said in its report. The PRA’s “articulation of its policyholder protection responsibilities appears to be unfinished business”, although there was no evidence that PRA supervisors were falling short of their duties, the IEO said.

BoE Deputy Governor and PRA Chief Executive, Sam Woods, said the PRA does not seek to protect all policyholders equally and will direct more resources to those who would suffer greater financial hardship if their policies do not pay out as promised.

Continue Reading “British regulator to focus more on protecting insurance policyholders” at Nasdaq News

Flawed Solvency II risk margin is hurting consumers

Analysis by Willis Towers Watson finds the current formula is causing higher premium rates, reduced competition and poor value for consumers

LONDON, Thursday 16 March, 2017 — Willis Towers Watson has responded to a European Insurance and Occupational Pensions Authority (EIOPA) Discussion Paper on the upcoming review of Solvency II, where it has identified significant flaws in Willis-Towers-Watsonthe formula used to calculate the risk margin and recommended a fundamental review of its methodology and calibration.
Kamran Foroughi, Director at Willis Towers Watson, said: “We believe the high level of risk margin currently attached to long-term insurance products is resulting in higher premium rates and reduced competition, leading to worse value for consumers.”
Willis Towers Watson’s submission notes that the risk margin has become a much more material component of insurers’ balance sheets, leading to a number of challenges and changes in business practice, including:
• Asset Liability Matching. Insurers’ ALM challenges related to risk margin have been exacerbated by falling interest rates.
• Risk transfer. The bigger the risk margin relative to the rest of the technical provisions, the more insurers are incentivised to offload risk to reduce the risk margin.
This can be done via reinsurance to a company outside the EU which is not bound by Solvency II rules. Continue reading Flawed Solvency II risk margin is hurting consumers

Solvency II complicates captive strategies

The implementation of Solvency II in Europe has provided an additional risk management tool to owners of European captives, but at a cost, forcing risk managers to re-examine whether they are getting the best use out of their captives.confused-face-484x295

Solvency II, the European Union-wide risk-based capital rules for insurers and reinsurers, came into force in January 2016, and with it came new elements that have affected captives, for better or for worse.

“What we’re seeing as managers is an increased interest in strategic reviews and companies re-examining the captives to explore optimization opportunities and thus potentially…

Continue Reading “Solvency II complicates captive strategies ” at Business Insurance News

Deal or no deal? US divided on EU insurance agreement

On the face of it, the insurance covered agreement announced on January 13 should be everything Donald Trump detests. Signed in the final days of Barack Obama’s administration, when Trump had already been elected, the deal is between the US and the European Union – an institution the new president has repeatedly disparaged.1343

It will pre-empt the authority of individual US state legislators and require them to defer to EU regulation of European insurers in US markets.

On top of that, the agreement was negotiated by the Federal Insurance Office (FIO), an Obama-era creation Republican lawmakers are keen to abolish.

Continue Reading “Deal or no deal? US divided on EU insurance agreement” at Risk.net

PRA says insurers exaggerating Solvency II problems – report

Prudential Regulation Authority (PRA) chief executive Sam Woods has reportedly told parliament that insurance companies are overstating the issues regarding Solvency II.4088135-blow-me-funny-quotes

Woods said on Wednesday before the parliament’s Treasury Select Committee that Solvency II is “basically a sensible regime,” Reuters reported.

However, he admitted that Solvency II, which sets out capital rules for EU insurers, needs some changes.

Continue Reading “PRA says insurers exaggerating Solvency II problems – report” at Insurance Business News

Pensions: IORP II and the elephant in the room

After almost two years of negotiation, the revised European Union Directive on the Activities and Supervision of Institutions for Occupational Retirement Provision (IORP II) comes into effect today.newPic_4681_jpg_3388340b

Member States will now have two years to incorporate it into national law.

But what is IORP II? How will it impact on occupational pension provision in the UK? And what about the elephant in room – Brexit?

Background

IORP I came into effect in 2003, and lays down rules for activities carried out by IORPs (which, in the UK, are broadly employer-funded occupational pension schemes).

Continue Reading “Pensions: IORP II and the elephant in the room” at Lexology

Are insurance rules making people work longer?

here has been plenty of controversy surrounding the EU’s impact on UK insurance laws in recent weeks. Last week we woman-at-desk-cryingrevealed that uninsured drivers are to get compensation under a new EU rule; and now a report has outlined some even more significant consequences of the EU’s regulation.

Annuities have, reportedly, become more expensive as a result of Solvency II – and that means that people are needing to work longer before they are able to retire.

The statement was made as part of a hearing at the Treasury Select Committee on the impact of Solvency II as the industry looks to relax some areas of the regime post-Brexit.

Continue Reading “Are insurance rules making people work longer?” at Insurance Business News

 

AIA Hails Covered Agreement; Will Benefit Insurers on Both Sides of the Atlantic

The American Insurance Association hailed the successful completion of a covered agreement on insurance and reinsurance prudential measures between the United States and European Commission. The agreement establishes mutual indexacknowledgement of prudential supervision in the European Union and the United States, which will eliminate the increasing barriers to U.S. groups operating in Europe.

The Treasury Department’s Federal Insurance Office (FIO) and the U.S. Trade Representative (USTR), which represented the U.S. in the negotiations, will now consult with and submit the agreement to four Congressional committees (House Financial Services, House Ways and Means, Senate Banking and Senate Finance) on a day when all committees are in…

Continue Reading “AIA Hails Covered Agreement; Will Benefit Insurers on Both Sides of the Atlantic” at PRWeb

Don’t bank on Solvency II going away anytime soon

It has become a bit of a guessing game trying to figure out why the UK population voted for Brexit: was it immigration, money, sovereignty? 

However, there is anotheraid1947220-728px-get-rid-of-annoying-people-step-1-version-3 meme that has always appeared in the UK’s wrangles with Europe and that is the issue of what people like to call “red tape.”

The view goes that outside the European Union (EU), the UK will be able to jettison many of the rules that it has found inconvenient.

There’s no doubt that many, even those who did not support the Leave campaign, would not weep to see the back of some of the more overbearing EU financial regulations.

Continue Reading “Don’t bank on Solvency II going away anytime soon” at the Actuarial Post

Insurers claim capital rules are harming customers

UK insurance groups have claimed that the latest EU capital regulations are harming customers and distorting markets — and are calling for changes in the way they are implemented.

According to thefrustrated-home-inspector-customers Association of British Insurers, the Solvency II rules, which came into force at the start of the year, have had unintended consequences and a reassessment is needed.

Its comments come in a submission to parliament’s Treasury select committee, which has launched an inquiry into the post-Brexit future of Solvency II in the UK.

When it launched the investigation in September, the committee said it would look at the impact of the rules on customers, the economy and the competitiveness of the UK insurance industry.

Continue Reading “Insurers claim capital rules are harming customers” at Financial Times