new review Solvency II: an appropriate answer to the financial crisis

Swiss Re welcomes the European Union’s informal agreement on 26 March 2009 on the broad framework principles of the Solvency II Directive, and the expected formal decision to pass it to both the EU Parliament members and the EU Council for voting in April and May respectively.

As an an important step forward towards state-of-the art insurance regulation, the agreement comes after intense discussions between the EU Council, the EU Parliament and the Commission, under the lead of the Czech presidency, to resolve the major contentious issues, particularly on group support and the treatment of equity. By agreeing on a joint compromise of the Solvency II framework directive in its revised form, the EU is taking a leading role in economic and risk-based insurance regulation worldwide, after a similar approach has been successfully pioneered by the Swiss authorities through the Swiss Solvency Test.

Raj Singh, Swiss Re’s Chief Risk Officer stated: “Against the background of the current financial crisis, the expected passing of the new Solvency II framework directive by the European Parliament and the Council will send a strong signal that an economic and risk-based view on insurance business is of outmost importance.”

Singh added: “Solvency II is the appropriate answer to the financial crisis, and one which the insurance industry and insurance regulators have long asked for, because it provides incentives for sound risk and capital management and provides policyholders with better protection. Importantly, this informal agreement on Solvency II comes at the right time for the meeting of the G-20 countries in London in April. It will clearly strengthen the position of the European insurance industry”

Swiss Re has consistently supported the introduction of economic, risk-based insurance regulation in the EU. The European Parliament and the Council are now preparing the ground for the timely implementation of Solvency II within the envisaged time horizon of late 2012. Swiss Re, together with the CRO Forum, will continue to support the introduction of efficient capital management provisions in the Directive at a later stage, and will continue to participate in the discussion about the implementing measures of the Directive (so-called “level 2” under the Lamfalussy process) which will define the key operational details of the new framework. Also, in view of the similarities between the new EU Solvency framework and Switzerland’s own supervisory regime, the Swiss Solvency Test, Swiss Re will support efforts to accelerate the convergence of supervisory regimes.

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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