Solvency II

Risk management is the foundation of Solvency II through Pillar 2 and it is an area where we can help you to get the most from the changing regime.

Solvency II is a fundamental review of the capital adequacy regime for the European insurance industry. It will bring new, strengthened EU-wide requirements on capital adequacy and risk management for insurers with the aim of increasing both policyholder protection and harmonisation across Europe; and the strengthened regime should reduce the possibility of consumer loss or market disruption in insurance.

Solvency II requires action now from all European insurers, especially those expecting to need internal model approval.

Solvency II is the largest ever change to European insurance solvency regulations. The European Commission has estimated total costs of implementation for the industry in Europe to be €2-3bn over 5 years.

Most European insurers must implement the full Solvency II requirements by January 2014, and this will be a major driver for the development and embedding of Enterprise Risk Management (ERM) for the insurance industry. For many, it has already meant a very significant change and has been a challenging transformation project.

We can help with all aspects of your implementation plan, including:

• improving risk management practises and governance;
• building and validating internal models;
• developing technical provisions methodology;
• training management and board members on their responsibilities and on strategic Solvency II issues;
• internal model and risk management documentation;
• developing and refining the ORSA (Own Risk and Solvency Assessment);
• developing Solvency II reporting processes; and
• improving the quality of management information

We are working with many Lloyd's syndicates and insurers on the internal model approval process (both pre-application and application), and on other preparations for Solvency II.