Solvency II Gap Analysis Toolkit
Distilling complex requirements of Solvency II into a manageable set of questions and required actions
On 10 July 2007, the European Commission published the proposed Solvency II Draft Directive, setting out the framework of a new economic risk based solvency regime for all European Member States.
The solvency regime introduced in the UK over the last few years anticipates some of the changes being introduced by the Directive. Although this may mean the UK is ahead of its European peers, there remain a number of differences between the UK and European regimes. UK firms need to understand how far they have come already in complying with the requirements of Solvency II and how much remains to be achieved.
At a minimum, firms will need to implement:
- A well-designed solvency framework supported by the entire business.
- A fully embedded culture of risk management.
- An integrated approach which delivers sustainable value.
To achieve this, insurers need first to understand their current position by:
- Comparing their existing risk quantification methods, capital and risk management as well as reporting arrangements with future regulatory requirements.
- Identifying and sizing the gaps against directive requirements.
- Establishing the options for addressing gaps.
- Considering the costs/benefits of all alternatives available.
Only by addressing Solvency II early will synergies with existing initiatives such as the FSA’s INSPRU and IFRS be fully exploited. We believe that firms which are proactive and prompt in assessing their readiness for Solvency II and addressing the gaps in their existing approaches, processes and systems will gain competitive advantage amongst their peers.
For further information, download our Solvency II Gap Analysis Toolkit (PDF, 150KB)
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