The National Association of Insurance Commissioners has asked the new Treasury secretary to clarify provisions of the covered agreement reached between the United States and the European Union in response to the bloc’s Solvency II directive.
The covered agreement deal negotiated by the U.S. Department of the Treasury under the Obama administration and the Office of the U.S. Trade Representative, announced on Jan. 13, aims to address the fact that the European Commission has not deemed the United States an equivalent jurisdiction, per the EU’s Solvency II directive outlining a risk-based capital regime for insurers and reinsurers in Europe.
Continue Reading “NAIC asks Treasury secretary to review EU-US covered agreement” at Business Insurance News
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.
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?
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
As the UK government continues to develop and advance its ambition of turning London into a global hub for insurance-linked securities (ILS) business, international law firms have highlighted some uncertainties and potential shortcomings of the new guidelines.
The establishment of an ILS hub in the United Kingdom has the potential to expand the reach and influence of the ILS marketplace, while increasing the relevance and position of London as a global hub for insurance and reinsurance business.
Fist discussed in March 2015, the UK Treasury has now published its draft proposals for the framework, with the UK’s financial regulators, the Prudential Regulation Authority (PRA) and the…
Continue Reading “Law firms highlight potential issues with UK’s draft ILS regulations” at Artemis
Regulatory requirements across all industries are constantly evolving. Rules are also becoming increasingly intricate because of the overlap involving multiple nations and jurisdictional specifics.
Both the Brexit vote and Trump’s victory have added further uncertainty about the future, leaving CIOs and IT managers in a minefield of business risks and with the responsibility to ensure their companies comply with changing legislation.
The UK voted to leave the European Union on 23 June, but will remain a member but will remain a member until the conclusion of the withdrawal – at least 2019.
Continue Reading “What Brexit and Trump mean for compliance” at Information Age
Is it possible for regulators to become too heavily involved in the insurance business? One giant of the UK insurance sector seems to think so. Legal & General has accused a regulator of becoming increasingly interventionist in their control of the industry believing that their role should be cut back.
Specifically, it highlighted the position of the Prudential Regulation Authority (PRA) in relation to Solvency II rules stating that it is “effectively overruling the judgment of the board” in relation to setting capital requirements; and that it has started to take an increasingly “directive” approach in regards to transaction approval.
“Boards do not feel empowered to make commercial decisions without reference to the regulator,” it said in a submission to the Treasury Select Committee.
Continue Reading “Time to scale back the role of insurance regulators?” at Insurance Business
LONDON (Reuters) – Market falls triggered by Britain’s vote to leave the European Union will hit British insurers’ capital, raising concerns over their ability to pay dividends or hand cash back to investors.
New European capital Solvency II rules introduced in January require insurers to account for investment risk, and solvency models to be regularly updated.
Life insurers in particular invest in bond markets to match their long-term pension liabilities, and have increasingly moved into corporate bond markets which offer higher returns.
But confidence in UK corporate bonds is dipping and equity markets, in which insurers also invest, are weaker too.
Continue Reading “Brexit vote prompts fears over UK insurers’ capital strength” at Reuters
The adoption of formal risk appetite statements by many insurers is driving a fundamental shift in reinsurance purchasing, according to Willis Re, the reinsurance arm of Willis Towers Watson P.L.C.
Willis Re surveyed 241 insurers in 48 countries and found that 64% now have a formal risk appetite statement, with 17% saying they are planning to develop such a statement soon.
Most insurers that have a risk appetite statement — 87% — are using it to drive reinsurance decisions, according to the study published Monday.
Use of risk appetite statements is most prolific in Europe, Asia and Africa, Willis Re said, with more than 85% of respondents from those regions indicating that they have, or will have, a risk appetite statement.
Continue Reading “Risk appetite statements drive reinsurance buying trends” at Business Insurance News
First of all, Pillar I requirements have prompted (re)insurance companies to rethink their overall capital positions. And that’s been a good thing.
While most companies across Europe have been using internal capital models and various capital measures for many years mostly for internal capital management purposes, the introduction of a new, risk-based capital regime has led to many firms revisiting and ultimately reconsidering the risks they are exposed to across both assets and liabilities.
However, there is the challenge of comparability. A rating agency’s opinion of a (re)insurers risk-based capital adequacy is a major input into the overall rating, if not one of the most important inputs for a large number of rated entities.
Continue Reading “What do the Credit Rating Agencies think of Solvency II?” at The Actuarial Post
Solvency II ratio comparability is being hindered by insurers ability to use one or more methods to enhance their ratios, according to Moody’s.
The US rating firm said in a new report that the use of internal models creates potential for inconsistent assumptions.
Methods to enhance ratios that have been used so far, according to Moody’s, include transitional measures and third country equivalence.
The rating firm said ratio comparisons are limited by diverging choices about whether to include volatility or matching adjustments in the liabilities’ discount rate. It also said that there have been very few disclosures that quantify the impact of these enhancements.
Continue Reading “Solvency II ratio comparisons limited by diverging choices: Moody’s” at Intelligent Insurer News