The Solvency II Process: Overview and Critical Analysis

24 Pages Posted: 13 Jan 2006 Last revised: 10 Jun 2013

See all articles by Martin Eling

Martin Eling

University of St. Gallen - Institute of Insurance Economics; University of Saint Gallen - School of Finance (SoF)

Hato Schmeiser

University of Muenster - Faculty of Economics; University of St. Gallen - I.VW-HSG

Joan T. Schmit

University of Wisconsin - Madison - Department of Actuarial Science, Risk Management and Insurance

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Abstract

As early as the 1970s, European Union (EU) member countries implemented rules to coordinate insurance markets and regulation. However, with the more recent movement toward a general single EU market, financial services regulation has taken on new meaning and priority. Solvency I regulations went into effect for member nations by January 2004. The creation of risk-based capital standards, the main focus of Solvency II, now appears likely sometime after 2007. The purpose of the discussion presented here is to outline the specifics of Solvency II as they currently stand and provide input to evaluation process that, ultimately, will determine the exact form of capital regulation. Our analysis leads us to conclude that caution is warranted.

Keywords: Regulation, Market Discipline, Solvency II

JEL Classification: G11, G22, G23, G31

Suggested Citation

Eling, Martin and Schmeiser, Hato and Schmit, Joan T., The Solvency II Process: Overview and Critical Analysis. Risk Management and Insurance Review, Vol. 10, No. 1, pp. 69-85. Available at SSRN: https://ssrn.com/abstract=869267

Martin Eling (Contact Author)

University of St. Gallen - Institute of Insurance Economics ( email )

Kirchlistrasse 2
St. Gallen, 9010
Switzerland

University of Saint Gallen - School of Finance (SoF) ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Hato Schmeiser

University of Muenster - Faculty of Economics ( email )

Universitätsstr. 14-16
48143 Munster
Germany

University of St. Gallen - I.VW-HSG ( email )

Kirchlistrasse 2
St. Gallen, 9010
Switzerland

Joan T. Schmit

University of Wisconsin - Madison - Department of Actuarial Science, Risk Management and Insurance ( email )

Madison, WI
United States
608-262-4240 (Phone)

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