Solvency II was initiated by the European Commission in 2000 and represents a fundamental change to European insurance regulations. The project aims to create a more harmonised, risk-orientated solvency regime, resulting in capital requirements that are reflective of the risks being run.
However, there are still areas of disagreement from stakeholders – one of which is how to ensure the framework recognises the nature of liabilities for long-term business. There have been several Quantitative Impact Studies (QIS) which have enabled stakeholders to understand the potential impact of Solvency II better.
As a consequence of this work, the insurance industry has expressed concerns over the ability to provide long-term products with guarantees that represent value for money for consumers. The industry has therefore been working with policymakers to ensure that the specific features of insurance products are recognised in the new framework.
The purpose of this white paper is to take a critical look at the proposals being made and to consider the impact on the industry, consumers and wider economy if these measures are not introduced.
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