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The Brussels-based European insurance and reinsurance federation (CEA), has published a report highlighting the key issues it sees from last year’s QIS4 exercise, the fourth quantitative impact study run by the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) in the lead up to Solvency II.
Whilst solvency margin requirements for EU insurers have been in place since the 1970s, this was formalised as Solvency I in 2002. In 2007 it was agreed to go ahead with Solvency II, modeled on the Basel II template, and CEIOPS has been running quantitative impact studies (QIS). The fourth, QIS4, ran from April to July 2008 and findings released in November 2008.
The CEA is broadly supportive of Solvency II - “We appreciate the high quality of the work done on Solvency II and the good cooperation we have had with CEIOPS and the European Commission,” said Alberto Corinti, deputy director general of the CEA. “We hope that our paper will prove helpful as we tackle the issues that require further work.”
However there are areas where the CEA is calling for work on the specifications – general comments were that more guidance is needed on insurance groups and own funds, lack of clarity on the application of proportionality in Pillar I, and the need for more leeway in segmentation (the CEA has published its own papers on proportionality and segmentation). There were also comments on liabilities, market value risk margin, and intangible assets and goodwill. Many of the CEA members surveyed also felt that the solvency capital requirements produced were “unjustifiably high” and that calculation methods were getting too complex.
Still there were good marks for Solvency II, but the political storm regarding cross-border supervision of the prospective directive has still to be resolved.
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