In this press release, Representatives of the European insurance industry have urged the European Commissioner for the Internal Market and Services, Michel Barnier, to ensure that the overly conservative and prescriptive elements still contained in the draft implementing measures for the forthcoming EU regulatory regime, Solvency II, are urgently addressed.
Economic Capital Models (“ECMs”) are a hot topic of discussion within the insurance industry: what is the target level of confidence?
At the heart of the issue is the complexity of the way deferred tax items are recognized, coupled with all the complexities of a market consistent valuation regime. This combined complexity and uncertainty manifests itself in a conservative assessment of the value of tax and the role it plays in a valuation system.
Solvency 2 represents a step change in the prudential regulation of insurance that promotes the best practice standards of risk management advocated by the CRO Forum. The challenge of implementing a harmonised and risk-based economic approach across the EU should not be underestimated.
This presents the insurance industry with significant challenges and opportunities. The paper recommends that assessing risk over the life cycle of these nanomaterials should be standard practice for the nanotechnology industry, as well as for their insurers and reinsurers.
The longevity paper finds that increased life expectancy will challenge society to provide adequate income to all individuals through old age. Consequently, demand for longevity risk mitigation solutions is growing, and life insurers should play an important role. However, their current capacity to take longevity risk onto their balance sheets is small relative to global longevity risk exposure.
As a consequence of globalisation, public expectations have risen that businesses should behave responsibly and accountably in terms of minimizing their environmental and social footprint. Even though this footprint is low for the insurance industry due to the service nature of its operations, headline risk has nonetheless increased.
This best practice paper details considerations and best practices on how these principles can be applied to the extrapolation of interest rates, equity and interest rate implied volatility and in situation in which an option has been written on a security for which no liquidly traded options exist at all.
The CRO Forum and CFO Forum are pleased to be able to provide comment on the QIS5 draft specification, as prescribed in the QIS5 consultation. We welcome the openness to cooperation between us and trust that this is merely a point in our continuous dialogue.
QIS5 Technical input
