GCC: Solvency II is changing the game

14 September 2011

Guy Carpenter and Co claims market consensus holds that Solvency II will ultimately benefit reinsurers, but conceals numerous challenges and opportunities.

GCC states that the Solvency II regime has several key benefits and drawbacks for reinsurance cedents.

Some benefits include:

• greater transparency and convergence in reporting among Solvency II and equivalent regimes;
• improved reinsurance security, overall;
• a stronger and deeper insurance-linked securities (ILS) market.

Some drawbacks are:

• capital requirements and compliance costs are discriminately higher for smaller reinsurers, may force some consolidation;
• more intense, volatile underwriting cycles.

GCC warns that Solvency II will profoundly impact the reinsurance market - not only within Europe but globally, and advises that all companies affected by these sweeping changes prepare now to navigate this changing and increasingly volatile reinsurance market.

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