With top insurance executives from around the world gathered in Berlin as the European Union prepares to release a framework directive on its Solvency II proposed risk-based capital regime for European insurers on Tuesday, it’s little surprise the new insurer capital adequacy approach was the subject of considerable discussion today at the 43rd annual seminar of the International Insurance Society Inc.
While most of the European industry panelists addressing the issue praised Solvency II as a step towards needed regulatory harmonization in an increasingly global market and, potentially, a source of competitive advantage for European insurers, attendees responding to an instant poll at the end of the day were less certain the measure will live up to its hype.
Asked whether Solvency II was likely to reduce the amount of capital their companies would require, 47% of those at a session on the proposed regulatory measure responded “no.” The results clearly perplexed Karel Van Hulle, head of the European Commission’s unit on insurance and pensions.
Mr. Van Hulle was a participant in this afternoon’s IIS Solvency II panel, during which he predicted that Solvency II’s emphasis on risk management would reduce capital requirements for E.U. insurers that demonstrated quality risk management efforts.
Mr. Van Hulle said he was disappointed with the poll results because a goal of Solvency II is to reduce capital requirements in exchange for better risk management. “Does that mean you think you can’t do that,” he asked conference attendees.
While they weren’t sure Solvency II would benefit them by reducing their capital requirements, 56% of the insurance executives participating in the instant poll said they thought the new regulatory regime would improve the international competitiveness of E.U. insurers. A smaller percentage expect the regime to benefit consumers, with 43% saying Solvency II would benefit insurance buyers vs. 33% who said it wouldn’t and 22% who predicted no change.
And attendees were nearly evenly split on whether the measure would lead to increased consumer trust of insurers, with 35% saying yes, 30% saying no and 30% anticipating no change.
While IIS attendees appeared somewhat uncertain Monday about the anticipated benefit of Solvency II, there appears to be less ambiguity in Berlin about Knut, the celebrity polar bear cub at the Berlin Zoo. A visit yesterday found a huge queue waiting for a glimpse of the cute little Eisbar gnawing on his handlers’ forearms during the afternoon hour he was made available for public viewing.
And, while Knut is still pretty darn cute, it’s clear he won’t be a cub forever. He already appears to be considerably larger than in most of the photos and posters you see inviting visitors to the zoo.