We use cookies to improve site performance and enhance your user experience. If you'd like to disable cookies on this device, please see our cookie management page.
If you close this message or continue to use this site, you consent to our use of cookies on this devise in accordance with our cookie policy, unless you disable them.

In association with

Home > Regulation > Regulation Tracker > Solvency II

Solvency II

regulation keypoints

Solvency II is a 155-page fundamental review of the capital adequacy regime for the European insurance industry.

It aims to establish a revised set of European Union-wide capital requirements and risk management standards that will replace the current solvency requirements.

While there has been talks of postponing these capital requirements coming into force, in June 2011 the FSA stated it continued to work on the assumption the implementation date was 1 January 2013.

* The main objective of supervision is “the protection of policyholders and beneficiaries”, although member states must also ensure supervisory authorities shall consider the potential impact of their decisions on the stability of the European Union’s financial systems.

* Conditions an insurer must meet if it establishes a branch in another member state or pursues business in another member state under the freedom to provide services are set out.

* Pillar one of Solvency II defines two capital requirements:

1) The Solvency Capital Requirement (SCR) is the target level of capital under normal circumstances.

The calculation of the solvency capital requirement is based on a value at risk (Var) measure, where the probability of results being worse than expected over a holding period of one-year may not lead to a bankruptcy of the insurance company at a confidence level of 99.5 per cent.

2) The minimum capital requirement (MCR) indicates an absolute minimum level of capital.

To read more about the capital requirements for insurers click here.

  1. Published by FSA, 21 Nov 2011

    Capital requirements for insurers

    The FSA has published its first consultation paper on how to bring in the European Union’s Solvency II requirements.

    Proposed: deadline for responses 15 Feb 2012.

  2. Published by FSA, 21 Nov 2011

    Solvency II and long-term insurance

    The FSA has set out rules for linked long-term insurance business, which transfer risks to policyholders or beneficiaries.

    Proposed: deadline for responses 15 Feb 2012.

  3. Published by FSA, 21 Nov 2011

    Adviser charging and insurers

    How insurers should handle cancelled policies post-Retail Distribution Review is explained in 1 45-page consultation paper.

    Proposed: deadline for responses 10 Jan 2012.

  4. Published by FSA, 10 Oct 2011

    Changes to capital rules for overseas subsidiaries

    Plans to change the FSA’s requirements for how much capital companies with non-EEA (European Economic Area) subsidiaries must hold were outlined in...

    Proposed: deadline for responses 30 Jun 2011.

  1. ‘Regulator’s actions are post-event’: FSCP’s Blair
    EU Directives| Aug 09, 2012

    ‘Regulator’s actions are post-event’: FSCP’s Blair

    Vice-chair of the consumer panel and of an Eiopa stakeholder group talks to FTAdviser about current EU issues affecting financial services.

  2. FSA demands insurers reveal accuracy of bonus projections
    From Insurance| Mar 22, 2012

    FSA demands insurers reveal accuracy of bonus projections

    New requirement designed to make conduct of business sourcebook compliant with Solvency II.

  3. Solvency II plans ‘disastrous’ for pension schemes
    EU Directives| Nov 21, 2011

    Solvency II plans ‘disastrous’ for pension schemes

    Industry expert warns that Solvency II is going to “make life a whole lot harder” for pension schemes wishing to do buy-outs or buy-ins.

  4. FTA In Depth: Solvency II uncertainty will continue
    UK Regulation| Aug 25, 2011

    FTA In Depth: Solvency II uncertainty will continue

    Although it is "highly unlikely" that Solvency II could be further delayed, industry commentators have not ruled it out.

  5. Catching up with reality

    The outlook for women pensioners seems to have become an issue that is occupying the minds of politicians and policymakers.

Most Popular
More on FTAdviser