As insurers and reinsurers work to put their houses in order in time for the new regulatory regime that Solvency II will bring, Intelligent Insurer looks back to when the original solvency standards were put in place and why a new regime is needed.
It has been over 30 years since the EU put in place its original solvency regime during the 1970s, and over that time, the market—along with the risks that companies within the market are willing to take on—has changed considerably.
During the 1990s, it was decided that the solvency regime for insurers needed further development, and this led to a review of the solvency rules. Following this review, the rules were amended slightly under Directive 2002/13/EC in 2002, leading to a regime that is referred to as Solvency I.
However, it soon became clear that an even tougher regulatory stance was required.
Solvency II, Europe, AM Best