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The European Insurance industry has strongly supported the Solvency II directive proposal. In particular both CEA and the CRO Forum support the underlying economic risk-based approach, which allows for a system that reflects the true risk profile and risk mitigation schemes of insurance firms.
Since the proposal has been published there has been a succession of challenges to the economic risk based approach to a greater or lesser extent. The most recent of these challenges and one which CEA and the CRO Forum think is fundamental to the success of the project is the method of the calculation of the Minimum Capital Requirement (MCR). Therefore, they have decided to send a joint letter to European Commissioner for the Internal Market, Charlie McGreevy. In this letter the two organisations express their concerns about the calculation of the MCR in the QIS 4 consultation and the recent discussion paper from CEIOPS on the architecture of the MCR. Moreover, they present their compromise solution for the calculation of the MCR.
CEA - CRO Forum Joint letter to calculate MCR