1 June 2011 News

Cautious welcome for QIS5 results

Following its publication earlier this year, the results of the fifth quantitative impact study (QIS5) have been met with a mixed reaction.

A report by PricewaterhouseCoopers found that the results of QIS5, while presenting the European insurance industry as strong under the Solvency II regime, also demonstrated that insurers still faced a number of hurdles in preparing for Solvency II.

“QIS5 demonstrates there are still a number of areas where insurers face implementation challenges,” says Philippe Guijarro, partner at PwC.

“Low use of internal models in QIS5 suggests that insurance groups may not be as prepared as they could be. The high submission rate from UK insurers could mean they are ahead of the curve. PwC expects insurers to make a number of strategic and capital changes in light of the QIS5 results.”

Christopher Critchlow, chief executive of OAC Actuaries and Consultants, agrees. “The QIS5 exercise appears to have been a success in that the quantitative aspects of Solvency II and associated implications for insurers seem to have hit home.

“However, as well as showing the likely balance sheet impacts, QIS5 has highlighted some very important practical considerations, specifically around the modelling of projected assets, liabilities and associated capital requirements.”

While in general the results have been welcomed, some in the industry believe that they raise further questions. According to David Prowse, senior director at Fitch Ratings, catastrophe risk charges remain any issue.

“The feeling in the industry seems to be that the existing risk charges in QIS5 are too harsh and give rise to cash requirements which are too strong. This seems to be the main comment which is widely accepted across the industry,” he says.

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk