Financial Crisis strongly reinforces the case for Solvency II. EU should not water down the Solvency II directive or postpone the legislative process New CRO Forum publication comments on the consequences of the financial crisis forEnterprise Risk Management and regulation in the insurance industry
The Chief Risk Officer (CRO) Forum's Emerging Risk Initiative is committed to continuously improving risk management. This paper advocates as best practice a process whereby insurers and reinsurers re-examine their assumptions about frequency, severity, loss trends and how the risks in their portfolios are interconnected and generally stress test their internal processes for hitherto "unthinkable" dimensions of risks. The paper seeks to address rating agencies, analysts, governments, regulators, intermediaries and risk modelling firms alike. This study is non-binding and for reference purposes only.
This study shall provide a benchmark and guidelines towards Solvency II for the insurance regulators to assess internal models. The results of the study are a contribution of the CRO Forum to the Solvency II project. It should foster the discussion about the application of internal risk capital models for legal solvency – both Pillar 1 and 2 – purposes.