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Member, Beacon International Group, Ltd.
MADRIDFurther study may be needed before Solvency II, Europe’s proposed risk-based capital regime for insurers, is ready for implementation, a European Commission official said Wednesday.
The fifth quantitative impact study of insurers by the Committee of European Insurance & Occupational Pension Supervisors is to begin late this summer. Previously, QIS 5 was to be the final study before Solvency II is implemented in late 2012. Insurers and others have expressed concerns that information collected in the fifth study could lead the commission to call for significantly higher capital requirements under Solvency II.
But QIS 5 may need to be supplemented by at least one more survey before Solvency II requirements are finalized, said Karel van Hulle, head of the commission’s internal market and services unit.
Speaking at the International Insurance Society’s 46th Annual Seminar in Madrid, Mr. van Hulle said, “If QIS 5 were to lead to the conclusion that what we have proposed…is not satisfactory, we may well want to do a further test, which we will call QIS 6, where we will test some targeted issues.”
A sixth study would not be as broad as the fifth, but, if it is needed, it would be conducted “so that we can take a final decision on the basis of facts, not on dreams or theories,” Mr. van Hulle said.
Regarding insurer concerns about potentially significant capital increases under Solvency II, Mr. van Hulle said the commission “would be surprised if, for the industry as a whole, Solvency II will lead to higher capital requirements.”
Companies underwriting “risky business,” however, may have to increase capital under Solvency II “because we will go for a full risk-based regime,” Mr. van Hulle said.