Insurance Supervision

Solvency II – Here is how it works

At the start of 2016, European insurers have entered a new era: Solvency II has introduced a set of uniform rules for the industry, making risks visible at an early stage and requiring insurers to take appropriate precautions. The new system is based on three Pillars, designed to protect the assets and claims of policyholders – no matter how extreme the circumstances.


Pillar I: Capital requirements under Solvency II

Solvency II requires insurers to have sufficient financial means – more precisely: own funds – to survive negative events that, statistically speaking, occur only once in 200 years. These so-called “1-in-200” risks include e.g. major losses caused by natural catastrophes or extreme disruptions in equity and bond markets. >> Read more…


Pillar II: Governance and risk management

Solvency II is strengthening the mathematical side of insurance supervision. However, it is still humans and not computers who decide which risks are taken by insurance companies: The Prudent Person Principle is at the heart of the new system, too. The rules for implementing this principle are set under the second Pillar of Solvency II. >> Read more…


Pillar III: Reporting requirements under Solvency II

Solvency II is both a supervisory tool and an early warning system. To make it work, insurers have to report on their financial situation, risks and significant fields of business – not only to their supervisor, but also to the public. The reporting requirements are defined under Pillar III of Solvency II. >> Read more…


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Solvency II at a glance