Author(s): Rym Ayadi
Date: September 2007

Download PDF

The article discusses the revision process of solvency requirements for insurance and reinsurance companies in Europe and suggests actions for the new solvency regime in line with market-consistent techniques for the valuation of assets and liabilities, together with a minimum solvency margin that implies the risks being faced by insurance companies. It discusses Solvency I regulation for insurance and re-insurance companies and its limitations and examines the developments in Solvency II. The contents of Solvency II include financial requirements, supervisory review process and market discipline. According to the article, Solvency II is expected to enable insurance and reinsurance companies to absorb significant unexpected losses and give assurance to policyholders and beneficiaries.