Our focus on Solvency II

The introduction of Solvency II will mean far-reaching changes for clients and for the industry. We have been preparing for Solvency II for years, Swiss Re’s Solvency II Project Leader Susanne Kaske-Taft explains, helping clients to get to the bottom of the complex directive and understand what effect it will have on their capital requirements.

The introduction will not be a one-off “big-bang” event. Rather it will mark an important shift in industry regulation towards an economic view of capital. As a result we need to look very specifically at how the directive will impact our clients’ daily business and engage in a dialogue on the consequences of these changes.

We have conducted an extensive assessment of our own solutions under Solvency II to see how the solvency effects will change under the new regulations. Given the way that the new rules will change the solvency effects of different products, clients will need to assess their current reinsurance programmes under the Solvency II regime and restructure, if necessary, to make them more efficient and better value for money.

Solvency is unavoidably complex in nature. In order to make good decisions about how to implement it, therefore, we believe that a thorough understanding of the details of the directive is necessary. For example, Solvency II will require insurers to adhere to economic principles for calculating their required and available regulatory capital using an internal model, a partial internal model or the Standard Formula. We found, for instance, that for non-proportional reinsurance, the Standard Formula approach struggles to support an economic view and therefore to offer appropriate capital relief.

Concretely in this example, therefore, clients need to ask themselves whether the Standard Formula will give them an accurate enough picture of their risk capital requirement. Partial or full-internal models would be more accurate.

Solvency II: Three new fact sheets

Three new Swiss Re fact sheets provide insight into the relationship between reinsurance and Solvency II.

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Solvency II

Solvency II – where we stand

Swiss Re, together with the rest of the European insurance and reinsurance industry, strongly supports the development of the Solvency II regime. The new regulations are economic and risk-based, something...

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