Solvency II

We’re blogging with a bit of an international bias this week, so apologies to those whose business is confined to the U.S. market. We’ll be moving on to other topics shortly. But Tuesday’s publication by the European Commission of its proposed framework directive on Solvency II, the new risk-based solvency regime for insurers operating in the European Union, is an important development. Essentially Solvency II is the European equivalent of the NAIC risk-based capital (RBC) formula introduced in the U.S. in the early 1990s. Solvency II regulation is expected to be implemented by 2010. The new approach will establish a common solvency system across Europe and result in greater capital efficiency. While Solvency II has been broadly welcomed by European insurers, the question is what are the impacts for U.S. insurers? Are you ready? Check out I.I.I.’s  background info  on U.S. RBC rules and solvency.

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