The financial impact of the implementation of Solvency II on the Mexican insurance sector

2020 ◽  
Author(s):  
Nora Gavira-Durón ◽  
Daniel Mayorga-Serna ◽  
Alberto Bagatella-Osorio
Keyword(s):  
Solvency Ii ◽  
Financial Impact ◽  
Insurance Sector

scholarly journals Capital regulation and systemic risk in the insurance sector

2018 ◽  
Vol 10 (2) ◽  
pp. 237-263 ◽  
Author(s):  
Thomas Gehrig ◽  
Maria Chiara Iannino
Keyword(s):  
Systemic Risk ◽  
Banking Sector ◽  
Financial System ◽  
Solvency Ii ◽  
Insurance Companies ◽  
Capital Regulation ◽  
Content Type ◽  
Insurance Sector ◽  
Main Challenge ◽  
European Insurance

Purpose This paper aims to analyze systemic risk in and the effect of capital regulation on the European insurance sector. In particular, the evolution of an exposure measure (SRISK) and a contribution measure (Delta CoVaR) are analyzed from 1985 to 2016. Design/methodology/approach With the help of multivariate regressions, the main drivers of systemic risk are identified. Findings The paper finds an increasing degree of interconnectedness between banks and insurance that correlates with systemic risk exposure. Interconnectedness peaks during periods of crisis but has a long-term influence also during normal times. Moreover, the paper finds that the insurance sector was greatly affected by spillovers from the process of capital regulation in banking. While European insurance companies initially at the start of the Basel process of capital regulation were well capitalized according to the SRISK measure, they started to become capital deficient after the implementation of the model-based approach in banking with increasing speed thereafter. Practical implications These findings are highly relevant for the ongoing global process of capital regulation in the insurance sector and potential reforms of Solvency II. Systemic risk is a leading threat to the stability of the global financial system and keeping it under control is a main challenge for policymakers and supervisors. Originality/value This paper provides novel tools for supervisors to monitor risk exposures in the insurance sector while taking into account systemic feedback from the financial system and the banking sector in particular. These tools also allow an evidence-based policy evaluation of regulatory measures such as Solvency II.

scholarly journals The Impact of the Solvency II Directive on the Insurance Sector in Europe // Uticaj direktive solventnost II na sektor osiguranja u Evropi

2017 ◽  
Vol 7 (7) ◽  
pp. 301 ◽  
Author(s):  
Iva Tošić
Keyword(s):  
Member State ◽  
Solvency Ii ◽  
Insurance Market ◽  
Insurance Companies ◽  
Legal Rules ◽  
Insurance Sector ◽  
Healthy Functioning ◽  
And Control ◽  
The Impact ◽  
Paper Author

Solvency of insurance companies, its conservation, regulation and control is the basis for the healthy functioning of the insurance market. Solvency is an indicator of stability and security of the companies, as well as the guarantor of execution of obligations. The Solvency II Directive was adopted on 25th of November 2009. She announced big changes in the insurance and reinsurance law, both EU member countries and non-member countries, when it comes to the solvency of the company. The main reason for the adoption of the new directive is strengthening of the integrated market in insurance and reinsurance law through harmonized legal rules. Solvency II aims at a common market, working permit in one member State allows the company carrying out activities in all other member countries. Also, during the implementation of the new directive the countries should have the same rights of protection of the insured. For both requirements is necessary that the supervision rules are agreed and converged all across Europe. In this paper author analyzes influence of the Solvency II on EU member countries, and to non-EU countries, the state of security in Europe, as well as the extent to which some of the countries harmonized their legislation with the Directive.

scholarly journals Italy

2020 ◽  
Vol 20 (233) ◽  
Author(s):  
Keyword(s):  
International Association ◽  
Solvency Ii ◽  
Technical Note ◽  
Group Supervision ◽  
The European Union ◽  
Insurance Sector ◽  
Regulation And Supervision ◽  
Insurance Group ◽  
Governance Risk ◽  
The Eu

This technical note (TN) provides an update and an assessment of the supervisory framework and practices for the Italian insurance sector since the last assessment concluded in 2013. The mission conducted a target review focusing on the implementation of Solvency II, the financial resilience of insurers, the effectiveness of supervision, and previously identified weaknesses without a full assessment of Italy’s observance with the International Association of Insurance Supervisors (IAIS) Insurance Core Principles (ICPs). Implementation of the European Union (EU) Solvency II Directive in 2016 has significantly strengthened regulation and supervision since the last FSAP, introducing risk-based capital standards, comprehensive insurance group supervision and new requirements on governance, risk management and controls. The supervision of intermediaries has also been strengthened in line with the EU Insurance Distribution Directive in 2018.

scholarly journals Globalization on the Romanian insurance market in terms of competition

2018 ◽  
Vol 12 (1) ◽  
pp. 311-323
Author(s):  
Aurora Elena Dina
Keyword(s):  
Insurance Industry ◽  
Market Competition ◽  
Solvency Ii ◽  
Insurance Market ◽  
The European Union ◽  
High Concentration ◽  
Major Step ◽  
Insurance Sector ◽  
Competition Level ◽  
Legislative Framework

Abstract This article proposes an analysis of the globalization process impact on the Romanian insurance industry in the last decade, after accession of Romania to the European Union, in terms of competition. One of the main lines of change caused by globalization includes changes in the legislative framework, which are considered to be forced by globalization. The introduction of Solvency II directive to the beginning of 2016 year to ensure for all European insurers, the integration, globalization and the unitary functioning on the same insurance market and the recent measures taken by several Romanian insurance undertakings to strengthen their financial position could be consider a major step to further encourage the improvement of market competition and better policyholder protection. In the last ten years, the Romanian insurance sector has been faced with changes such as mergers & acquisitions and bankruptcies that have modified the local landscape of the industry, so the majority of active companies in the market are now owned by the biggest financial groups worldwide. The results of the research reveal that the Romanian insurance market is characterised by a high concentration and competition level and in spite of the present risks, it is still attractive for foreign investors.

scholarly journals An Approach to Estimate the Outstanding Loss Reserve of the Non-Life Insurer Under Solvency- II Regime

2018 ◽  
Vol 7 (4.10) ◽  
pp. 375
Author(s):  
Ashiq Mohd Ilyas ◽  
S Rajasekaran
Keyword(s):  
Value At Risk ◽  
Risk Measure ◽  
Risk Estimation ◽  
Solvency Ii ◽  
Prediction Errors ◽  
Insurance Sector ◽  
Loss Reserve ◽  
Single Period ◽  
Run Off ◽  
Life Insurer

This paper studies the reserve risk estimation requirement under the Solvency-II regime that came into effect in the European insurance sector in January 2016. In particular, it shows how the outstanding loss of a non-life insurer can be estimated under this regime. This regime totally replaces the traditional approaches of providing standard deviations of the liabilities over their full run-off. The requirement under this regime is that each risk shall be calibrated using a value-at-risk measure with 99.5 percentile confidence level over a single period. In connection with this, a bootstrap framework is used to estimate the uncertainty of loss reserve over the single period time horizon. Two process distributions are used namely Over-dispersed Poisson and Gamma in two separate bootstraps to estimate the uncertainty of loss reserve. Further, a comparison is established in the estimated results and it is found that Over-dispersed Poisson process distribution produces lower prediction errors than the gamma process distribution.  

scholarly journals Corporate governance of insurers in Germany. German National Report

2020 ◽  
Vol 109 (1) ◽  
pp. 41-64
Author(s):  
Jens Gal
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Banking Sector ◽  
Insurance Industry ◽  
Solvency Ii ◽  
Competitive Environment ◽  
Insurance Sector ◽  
The Past ◽  
Good Corporate Governance ◽  
Paternalistic Approach

Abstract Corporate governance is the set of rules, be they legal or self-regulatory, practices and processes pursuant to which an insurance undertaking is administrated. Good corporate governance is not only key to establishing oneself and succeeding in a competitive environment but also to safeguarding the interests of all stakeholders in an insurance undertaking. It is insofar not surprising that mandatory requirements on the administration of insurance undertakings have become rather prolific in recent years, in an attempt by regulators to protect especially policyholders against perceived risks hailing from improperly governed insurance undertakings. In Germany this has been regarded by many undertakings as an overly paternalistic approach of the legislator, especially considering that the German insurance sector has experienced for decades if not centuries a remarkably low number of insolvencies and that German insurers were neither the trigger nor the (especially) endangered actors in the financial crisis commencing in 2007. Notwithstanding the true core of this criticism, that the insurance industry was taken to a certain degree hostage by the shortcomings within the banking sector, the reform of German Insurance Supervisory Law via implementation of the Solvency II-System has brought many advances in the sense of better governance of insurance undertakings and has also brought to light many deficiencies that the administration of some insurance undertakings may have suffered from in the past, which are now more properly addressed.

scholarly journals Norway

2020 ◽  
Vol 20 (263) ◽  
Author(s):  
Keyword(s):  
Risk Management ◽  
Solvency Ii ◽  
Regulatory Regime ◽  
Insurance Sector ◽  
Run Up ◽  
Industry Risk

The Norwegian insurance sector is well-capitalized. In recent years, the authorities have taken steps to recapitalize weak insurers and to boost capital for the overall industry. Risk-resilience has been strengthened by stronger retention of profits leading to accumulation of reserves, better risk management, and higher capital in the run-up to the implementation of the Solvency II regulatory regime.

Mis-estimation risk: measurement and impact

2016 ◽  
Vol 21 (3) ◽  
pp. 429-457 ◽  
Author(s):  
S. J. Richards
Keyword(s):  
Risk Factors ◽  
Solvency Ii ◽  
Risk Measurement ◽  
Financial Impact ◽  
Pension Scheme ◽  
Estimation Risk ◽  
The Impact ◽  
Portfolio Valuation ◽  
General Method ◽  
The Eu

AbstractWhen deriving a demographic basis from experience data it is useful to know (i) what uncertainty surrounds that basis, and (ii) the financial impact of that uncertainty. Under the Solvency II regime in the EU, insurers must hold capital against a number of risks. One of these is mis-estimation risk, i.e. the uncertainty over the current rates of mortality and other biometric risks experienced by a portfolio. We propose a general method for assessing mis-estimation risk, and by way of illustration we look at how mis-estimation risk can be assessed for a portfolio of pensions in payment from a UK pension scheme. We find that the impact of mis-estimation risk varies according to the risk factors included in a model, and that the inclusion of some necessary risk factors increases the financial impact of mis-estimation risk. In particular, the inclusion of risk factors which improve the model’s fit and financial applicability can lead to an increase in the mis-estimation risk. We also find that a full-portfolio valuation is preferable to using model points when assessing mis-estimation risk.

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