Analysis: Europe’s Solvency II to have Major U.S. Impact
Feb 16, 2011
The following article was published in Business Insurance News on February 16, 2011:
Europe’s Solvency II to have Major U.S. Impact: Analysis
By Judy Greenwald
NEW YORK—Solvency II, Europe’s upcoming risk-based rules for insurers, is likely to significantly affect all U.S. insurers at least somewhat, a consultant says in a report.
“Even insurers who do all of their business in the U.S. are not immune as calls arise for modernization and harmonization of insurance regulations and standards across borders,” says the recent report, “Forward Focus: Insurance Issues and Insights from Howard Mills, Solvency II from a U.S. Perspective.”
Mr. Mills, a former New York insurance superintendent who is Deloitte’s director and chief adviser of its insurance industry group, said while Solvency II’s impact will depend on the degree to which an insurer is U.S. based and has European or global subsidiaries, “ultimately even purely domestic U.S. insurers will be impacted.”
“It’s a massive challenge, from the mechanics of IT systems to the culture of the company” to comply with the risk-based rules that are to go into effect in 2012, Mr. Mills said.
Fundamentally, it is a competitive issue, he said.
“Companies that really embrace Solvency II and are really prepared to demonstrate to the regulators” that they meet solvency requirements and have appropriate capital reserves “will have greater flexibility than those companies that don’t,” Mr. Mills said.