The European Commission is to revamp capital requirements for insurers and reinsurers within the European Union by the end of 2005. The so-called Solvency II review is being compared to the Basel II rules for banks.
Indeed, the Commission plans to move to a risk-based regulatory approach of the Basel II kind to calculate how much capital insurers have to put aside to absorb unforeseen events.
“The timing for the Solvency II project is ambitious and challenging,” Alexander Schaub, director general for the Commission’s Internal Market department, said in a letter recently published on the Commission’s website. “The roadmap foresees the preparation of a Commission proposal for a framework directive for the end of 2005.”
The new rules will apply to all sectors of the insurance industry — life, non-life and reinsurance — throughout the 25-nation EU.