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The UK supervisor, the Financial Services Authority, has released a discussion paper (DP08/4) with the objective of getting the ball rolling on the preparation of UK insurance firms for the implementation of the European Union Directive on “the taking-up and pursuit of the business of insurance and reinsurance Solvency II)”.
This paper focuses on the key preparation elements of Solvency II with emphasis on what will have to change in UK regulatory requirements and practices and is part of a planned series of documents that include a previous paper released last April together with the UK Treasury, “Enhancing group supervision under Solvency II”. The FSA is inviting feedback to this recent paper by the end of this December and will publish all responses by March 2009.
Solvency II is the new capital adequacy, valuation and risk management regime for European insurers and reinsurers with premium income over €5M or provisions over €25M, and will take effect from October 2012. Although in many ways it is similar to the ICAS framework introduced in 2004 for insurance firms, Solvency II goes further in its requirements and there are some marked differences – the paper gives a summary of the differences on page 20.
On the credit crisis front, the US passed its $700BN bailout bill last Friday – but there were no signs of any positive market reaction, and the boards in Asia and Europe this morning are still firmly in the red.
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