CEA Note on CEIOPS´ draft answers to the “Second Wave” of Calls for Advice

30 September 2005

The Comité Européen des Assurances (CEA) issue its draft answers on the second wave of the calls for advice. The CEA is concerned that an inappropriate compromise resulting in a mixed model, part economic risk based approach and part arbitrary measures, which will not achieve the stated aims for Solvency II. This includes the suggested reliance on the present solvency rules for transitional periods rather than adopting a truly risk oriented approach from outset.

An overly prudent approach will lead to inappropriately high capital requirements and double counting of risks which will entail knock on effects on policyholders and markets. Prudence within the technical provisions must be recognised for solvency purposes.

CEA fears that there will be insufficient harmonisation to result in a level playing field across Europe. It also fears the failure to allow for all forms of diversification within the framework and an insufficient focus on issues specific to insurance groups from outset.

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