Firms fear rises in capital requirements from new directive

Large European insurers remain concerned that they will be required to hold more capital arbitrarily under Solvency II, the Financial Times reports.

Although the industry as a whole is not expecting the large rise that was predicted under earlier version of the directive, which will come into force in January 2013, some areas of the business still expect rises.

Small groups will use a standard capital requirement model, while larger ones will use internal, self-designed models. The concern is that larger groups will be required to hold more capital if their models produce a much lower number than the standard model.

Insurers will run the fifth quantitative impact study into Solvency II’s effects between August and November.

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