“Solvency II can help achieve the objective set out in the Lisbon agenda of making the EU the most competitive and dynamic knowledge-driven economy by 2010”, CEA President Gérard de La Martinière said at a conference in Brussels on “Solvency II: Strategic stakes for the insurance industry”.
Solvency II is the ongoing EU project to create a new, risk-related solvency system for European insurers and reinsurers. The proposal for a directive resulting from current work is expected for 2007.
The CEA is actively contributing to the development of an appropriate supervisory system. Beyond imposing quantitative capital requirements to enable an insurer to absorb significant unforeseen losses (Pillar I), the project considers the overall management of risks (Pillar II) and the disclosure of information favouring self-control and market discipline (Pillar III).
On capital requirements, Gérard de La Martinière said: “They should give reasonable assurance to policyholders while ensuring that the industry remains competitive. An optimal allocation of capital is only achievable through a pure risk-based system with an economic approach.”
Gérard de La Martinière underlined that Solvency II would affect the structure of insurance supervision: “Supervision will have to adapt to the new system and control the adequacy of companies' risk management techniques. It will also have to consider groups' pan-European activities by incorporating the lead supervisor principle.
The CEA President added that “harmonisation will be a key to establishing a level playing-field and thus to effective market integration. In the future, the risks involved will be the determining factor, rather than the location or the structure of the company.”
Gérard de La Martinière concluded: “By means of an optimal capital allocation and the adaptation of supervision, Solvency II will ultimately contribute to Europe's growth and international competitiveness.”
