Connecticut Insurance Commissioner Thomas B. Leonardi cautioned fellow regulators and other industry members that adoption of well-intended but untested European regulatory changes, known as “Solvency II” as currently proposed could weaken consumer protections and stability of insurers.

SOLVENCY 2

Speaking on Tuesday 4 May in BXL at a hearing on the EU's Solvability II Directive (2009/138/EC) revising the surveillance system for insurance and re-insurance (see EUROPE 9887), EU Internal Market Commissioner Michel Barnier said that very few insurers' tax years end on 31 October and he therefore wants the introduction date for the new directive to be put back from 31 October 2012 to 31 December 2012 in order to bring it into line with the end of most insurance companies' tax years (31 December). The review of the Solvability II Directive will be part of the draft "Omnibus II" legislation expected to be unveiled in June 2010 to amend several pieces of financial services legislation to incorporate changes set out in the EU financial supervision package.

John A Morrison is a Solution Architect in Risk Management. He is Director, Solution Partnerships of Union Legend (Asymptotix) and an advisor to REvolution Computing. He has published in December 2008 an important White Paper that is downloadable on our website. This is a White Paper about "Economic Capital", i.e. the amount of capital which a Financial Institution needs in order to survive in a worst case scenario.

Events of recent months prove that this is no longer an academic exercise. The Credit Crunch has seen Central Governments pumping fresh capital into the banks which were clearly undercapitalized and ill-prepared to deal with the crisis.