EIOPA Solvency II Rules May Lead to New Opportunities

This year will be a busy year for the insurance industry as it makes sure it is fully compliant with Solvency II regulations by January 2016 - and for some insurers it will be a case of deciding whether to withdraw from an entire class of business or a territory. Not a trivial decision.

Not just an EU impact

For big multinational insurance groups, like Allianz, Aviva, Aegon and Mapfre, that have their home office in the EU, Solvency II’s long reach can extend to their subsidiaries in the Americas or Asia-Pacific. Each of their offshore business units will need to comply with the national regulations in the country where they do business. But they may also need to conform to tougher Solvency II standards, potentially requiring that they significantly increase their capital reserves.


Is it easier to just close the doors?
Insurance companies must actively consider their risk exposures to current and future investments over extended timeframes and ensure they have sufficient capital reserves to cope with potential risks. As a result they may find that the reserves they have to put aside for certain business classes is so significant that it is no longer commercially viable.


Planning ahead means more Informed decisions
Ultimately, no insurer can safely assume it will be able to circumvent the tougher capital and risk-management standards imposed under a Solvency II-like regulatory regime. However, time is of the essence to study capital requirements in order to develop informed business decisions for the future; because of this result, Solvency II may present new opportunities.


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