Malcolm discusses with Captive Review the eight key developments that he believes will play themselves out during the first 12 months of Solvency II implementation and reach beyond the directly affected European domiciles.
The Solvency II Directive (2009/138/EC) is an EU Directive that codifies and harmonises the EU insurance regulation. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.
Of late, the data collation requirements of Pillar I together with the disclosure and reporting requirements of Pillar III have further emphasized the importance of having good quality data and systems in place with a strong internal control environment.
There are eight key developments that CWC believe will play themselves out during the first 12 months of Solvency II implementation and reach beyond the directly affected European domiciles. They are:
- Domiciles worldwide will look to bring in Solvency II style regulation in 2016. Some will be a straight copy, others will water down to provide a Solvency II-lite version.
- EU captives will consider their optimum domicile and some will move offshore.
- Venture capital will enter the EU small insurer space to provide much-needed solvency under Pillar One.
- Work will continue under Pillar Two to refine management and governance of risk processes and documentation appropriate to the business risks.
- Pillar Three reporting will cause the biggest headache.
- Regulators will be overwhelmed with filings.
- Smaller captive managers, without deep technical resources, will struggle to continue inside the EU.
- Focus will turn from liability to the asset side of the insurers’ balance sheet.
CWC can help advice you in your compliance to Solvency II, with services such as our system solutions.