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03 February 2011

CEA: Important adjustments still needed to EU’s new Solvency II regime


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The results of the fifth quantitative impact study (QIS 5) must be interpreted with caution but will show the need for further work on Solvency II implementing measures.


 
The fifth quantitative impact study (QIS 5) was a field test run late last year to identify key open issues and to draw conclusions about the potential impact of the proposed measures on the industry. Its results will be published at the beginning of March by the European Insurance and Occupational Pensions Authority (EIOPA). “As the QIS 5 process was extremely complex, lacked sufficient guidance for companies and suffered from tight time pressure, great care needs to be taken when interpreting the detailed results once they are available,“ said Persson.

Despite these difficulties, the overall results of QIS 5 will provide valuable insights into key elements that need to be changed and those that need to be maintained.

Not surprisingly, the exercise confirmed the sensitivity of the Solvency II framework to market volatility, in line with the market consistent approach taken in the Framework Directive. QIS 5 provided a snapshot of the 2009 year-end and tests have shown that the numeric results would have been markedly different at other times, despite there having been no substantial change in the financial position of the companies concerned. While the transparency resulting from the market consistent approach is a key feature of the Framework Directive, QIS 5 will reinforce the need to maintain and even further develop anti-cyclical technical measures. This will ensure the correct treatment of short-term market volatility and will avoid unwarranted supervisory or market reactions.




© CEA - Comité Européen des Assurances


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