Solvency II must not be diluted in the implementation process
EU finance ministers today adopted the directive regulating the European insurance industry. It sets high risk management and monitoring standards and is aimed at making the sector more stable and thus better equipped for difficult economic times. Implementation of the directive involves translating the strict principles it has laid down into formal regulations.
As Thomas Blunck, member of the Board of Management of Munich Re, sees it, "We want to have a level playing field in an integrated European insurance market. The standards defined should not be watered down in the next phase of the process. We want safety. And safety must be given top priority to protect the industry and its clients. Solvency II will play an important role in the insurance industry's development."
By 2012, when Solvency II comes into force, all insurers will have to have established professional risk management in all areas – from product design to investment policy. In future, reinsurance will play a more significant role in measuring risk capital and helping insurers meet their capital requirements, as it is an effective way of achieving risk-capital relief. Munich Re’s Solvency Consulting Team supports insurers in adjusting to Solvency II requirements and helps them design suitable reinsurance solutions.
Joachim Oechslin, Munich Re’s Chief Risk Officer, commented, "Companies that are well aware of their risks will be able to manage them more professionally. Munich Re has already been managing its business for a number of years along the lines of Solvency II principles and this has brought us success. Solvency II will make European insurers even more competitive. However, it is unfortunate that for the time being Solvency II does not make provision for group support and that it will not be possible for its principles to be implemented consistently everywhere because of some special national arrangements that have been agreed. Nevertheless, as the first risk-based supervisory system founded on principles, Solvency II has the potential to become a forerunner beyond the borders of Europe."
This press release contains forward-looking statements that are based on current assumptions and forecasts of the management of Munich Re. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.