Views
A balancing Act

A balancing act for regulators

I suspect that some insurers, particularly health insurers, will be sitting closer to their 100% Solvency ratio (SCR) mark, if not below, in their SII Q1 reporting. Will be interesting to see how regulators across Europe react to that!

Recent soft markets (downward pressure on premiums) and rising cost base have been on the UK Regulator’s (PRA) radar, evident by some of the messaging in their recent firm letters that were covered in Episode 3 of RegNut. Couple that with CoronaVirus + market volatility and you have the making of a perfect storm.

It will be very interesting to see how the PRA and their counterparts in Europe react to Q1 Solvency II reporting that would be crystallising the drop in mark value on balance sheets as at 31st March for most insurers.

Having been on the PRA’s side of the fence, I appreciate the delicate position the regulators are in since this situation puts their two primary objectives in conflict:

  • Customer protection: ensuring there is sufficient capital in place for the insurer to make valid claim payments (e.g. stopping the insurer from writing new business and increasing the risk)
  • Financial stability: ensuring no knee jerk reaction which may result in triggering contagion risks of default to their suppliers.

Originally published at CoVi Analytics blog.

Share this Story
  • A balancing Act
    Views

    A balancing act for regulators

    Solvency ratio for some insurers is likely to be closer their SCR in Q1 reporting, Will be interesting to see how regulators react.
Load More Related Articles
  • A balancing Act
    Views

    A balancing act for regulators

    Solvency ratio for some insurers is likely to be closer their SCR in Q1 reporting, Will be interesting to see how regulators react.
  • Perculating
    Views

    Percolation in Progress

    We haven't articulated our views on everything. Let us know if there is a topic you would like RegNut to cover.
  • EP3 Feature Image
    Podcast

    EP3 – Letters from a captious friend

    In this episode, we introduce our horizon scanning scorecard and do a deep dive on the "Dear CEO" letters published in Jan '20.
Load More By Waleed Sarwar
  • A balancing Act
    Views

    A balancing act for regulators

    Solvency ratio for some insurers is likely to be closer their SCR in Q1 reporting, Will be interesting to see how regulators react.
  • Perculating
    Views

    Percolation in Progress

    We haven't articulated our views on everything. Let us know if there is a topic you would like RegNut to cover.
Load More In Views

Check Also

Percolation in Progress

We haven't articulated our views on everything. Let us know if there is a topic you would like RegNut to cover.

Coming soon

At RegNut we are working on some great new content that will make the world of Risk and Regulation accessible to all.


In the meantime, take a look at our Horizon Scanning Scorecard and bookmark this site for lots more to come ... so watch this space!

EP3 – Letters from a captious friend