Stephen Haddrill, director general of the ABI, will this evening stress the importance of securing an economic, risk-based framework for Solvency 2, the planned EU-wide system of financial regulation of insurance companies.
Speaking in Brussels to an audience of European Commission officials, EU policymakers, MEPs, and insurance industry professionals, Haddrill will warn that Solveny 2 will fail to deliver incentives for better risk management and a level playing field if the economic and risk-based approach is not adopted.
“Solvency 2 promises some of the most significant changes to insurance regulation in a generation. This new Directive will help to maintain and build the confidence of consumers that insurance companies are financially secure.
“[It] has the potential to benefit insurers, their investors and consumers. We must push the work to a successful conclusion.”
Haddrill will also launch the results of an ABI survey of the finance directors of UK insurance firms on Solvency 2, conducted last month.
The survey found that over 80% of respondents thought the key advantages arising from Solvency 2 would be more efficient use of capital and greater incentives for improved risk management in their company.
79% of respondents pointed to the full recognition by supervisors of firms' internal capital models as the most important change expected from Solvency 2, while 84% believed that investors would gain from Solvency 2 because it would be easier to make comparisons between insurers.
The greatest concern (68% of respondents) was that the Solvency 2 Directive would not adopt an economic and risk-based approach. There was also concern that Solvency 2 could fail to reflect the advantages of the existing UK regime such as Individual Capital Adequacy Standards (ICAS).
Another key concern (cited by over half of respondents) was the risk that Solvency 2 would fail to deliver a level playing field owing to inconsistent implementation across the EU.
