Bridging risk and capital: Edition 2
This edition of
Countdown to Solvency II: Bridging risk and capital, written by our international Solvency II team, examines the political process and the likely commercial ramifications of the Directive. It also looks at the challenges and opportunities opened up by the crossovers and conflicts between Solvency II and the proposed new IFRS Phase II for insurance contracts.
Themes are explored across four articles:
- The draft framework unveiled
- The common front: A comparison between IFRS II and Solvency II
- Changing the competitive landscape: The commercial implications of Solvency II
- Making it happen: The political process
We cover the objectives of Solvency II with reflection on the change of behaviours it demands and discuss the implications of a move from a rules to a principles based approach on the relationship between insurers and supervisors. We consider the similarities and the differences between Solvency II and IFRS II. We review risk management under Solvency II and share thoughts on the impact of the new regime on pricing, investment preferences, credit ratings, securitisation and the like. And finally, there is still time for insurers to assess how Solvency II will affect their business (both operationally and strategically) and lobby for change, and so an understanding of how the process works is an absolute must.
We hope that this and future publications will provide insights that can help enhance this understanding and assist insurers in preparing for the changes ahead.
