Lloyd’s: A Delayed Solvency II Would Be a Distraction for Insurers
Copyright: | (c) 2011 A.M. Best Company, Inc. |
Source: | A.M. Best Company, Inc. |
Wordcount: | 669 |
Lloyd's is uneasy about talk of a possible one-year delay, to
"That's not something we would welcome," said
Solvency II is a
Signals pointing to a possible deferral have come from within both the
The sooner the Solvency II structure is in place, Savage said, the sooner Lloyd's can get back to its focus on writing insurance. He said he would like to see regulation removed from its current leading place as a concern of insurance CEOs around the world.
"Arguably the clock's just been put on pause for a while" on Solvency II, said Savage, who expressed the hope that a delay would not slow down Lloyd's preparations. "We've got good momentum behind the project," he said.
Savage, who spoke during an interview at a
"An overwhelming majority of our market players want us to just stick to the current timetable," Savage said.
"It is a harmonized EU-wide regime," McGovern said, listing its goals as "better regulation, deeper integration of the EU markets, enhanced policyholder protection and improved competitiveness.
McGovern said there are indications from the insurance industry that progress toward some of these goals has been hampered by the global financial crisis.
Lloyd's has welcomed the decision that under Solvency II it will be treated as a single entity for solvency purposes and that letters of credit will continue to count as capital, McGovern said. The first was recognition "that ultimately all policies at Lloyd's are backed by the same chain of security," McGovern said. "That was an important early win for us."
Throughout the preparation process, Lloyd's has argued that Solvency II should not create undue burdens in terms of costs or regulation on Lloyd's or on the wider insurance market in the EU.
In addition to a possible one-year delay on Solvency II, Savage said, there is also talk of "potential transitional measures which would then phase in certain components of Solvency II over a longer time period." These periods could range as long as 10 years, he said.
Lloyd's is spending almost 15 million pounds (
Lloyd's will benefit by being able to use its approved model under Solvency II, Savage agreed. This means the market will not have to rely on the much higher capital figure in the standard formula.
Savage looks for improvements under Solvency II in risk management, a better sense of risk appetites within the market and a clearer understanding of how businesses are run.
Lloyd's has been successful in arguing on the European level that its particular nature should be recognized, Savage said. "Lloyd's as a market is seen on a par with a unitary insurer," he said.
Lloyd’s has a current Best’s Financial Strength Rating of A (Excellent).
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