The run-off sector is a substantial market. In a survey this year, PwC estimated that a staggering €220 billion of discontinued non-life liabilities is held on the books of European insurers alone. Intelligent Insurer investigates the potential effects of Solvency II on this sector.
The latest delay to the implementation of Solvency II— which may now not come into force until January 2016— has prompted mixed views from insurers and reinsurers.Some say they are ready for the regulation, and just want to get on with it.
Others, it seems, welcome the extra time they now have to get their houses in order. And one thing many are grappling with is how new capital requirements could force changes to their business models, with some predicting a ﬂ urry in run-off activity as a result.
The proposed requirements will be far more prescriptive in the amount of capital insurers must hold against different types of risks. Some believe this will force re/insurers to reassess their strategic priorities—potentially placing non-core business into run-off—while also selling discontinued books of businesses to specialist third parties.
Run-off, DARAG, John Winter, Andrew Ward, PwC, Compre, Dan Schwarzmann