Solvency II is the updated set of regulatory requirements for insurance firms operating in the European Union. Similar to Basel II in many respects, it aims at bringing new standards to the insurance world. Markets are indeed pushing towards more objectivity and transparence in the financial performance and risk management metrics used.
Solvency II has grounds in the economic principles for the measurement of assets and liabilities. It is a risk-based system as risk is measured on consistent principles on which the capital requirements will depend directly. While the Solvency I Directive was aimed at revising and updating the current EU Solvency regime, Solvency II has a much wider scope. Among other goals, the new accord strives to :
Seen by many as similar to the banking regulation Basel II, the proposed Solvency II Framework has three main areas (pillars) as well:
Relates to the calculation rules and quantitative requirements (for example, the various ways to calculate the amount of capital an insurer should hold).
The Business & Decision Risk Management team has worked extensively on Pillar I calculation projects. We have successfully completed more than a dozen projects at more than 10 reference customers in Europe and beyond.
Our interventions covered the following aspects:
Pillar II highlights requirements for the governance and risk management of insurers, as well as for the effective supervision of insurers.
Pillar III focuses on disclosure and transparency requirements towards all external parties. Business & Decision Risk Technology Consulting key services:
With an experience based on more than 40 risk management projects (a majority related to Basel II), Business & Decision's consultants can help you implement a risk management approach in compliance with Solvency II. Going beyond the strict compliance to the principles depicted in the directive, we will assist you in turning the regulatory obligation into a value driver that will enhance your competitive advantage. We provide guidance through all the step of the process from data integration to the capital amount calculation.
The Business & Decision Risk Management team has worked extensively on Solvency II projects, especially on the Pillar I and III. We have successfully completed more than a dozen projects at more than 10 reference customers in Belgium and Europe since 2011.
Summary of our interventions covered the following aspects of the capital assessment:
Functional knowledge and experience in risk management:
Systems integration and delivery of custom-built solutions:
Statistical data modeling and knowledge of standard market models:
Risk data governance:
Change & Project Management:
From past missions and solution implementations we selcted a number of case studies.
Case Study - Solvency pillar 1 and 3 Architecture Review
As of January 2016, the new risk framework Solvency II has become applicable in the Insurance world. Coupled with a low interest rate environment, its introduction can mean a significant change in the way of doing business as well as its risk assessment. This note summarizes the most important risk related challenges for the future of the Insurance business.
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To get to know the challenges of the Solvency II and how Business & Decision adressed them practically:
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