O'Reilly logo

Governance, Risk, and Compliance Handbook: Technology, Finance, Environmental, and International Guidance and Best Practices by Anthony Tarantino

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 42

INSURANCE INDUSTRY AND SOLVENCY II

Anthony Tarantino, PhD

42.1 INTRODUCTION

(a) Solvency I to Solvency II

(b) Basel I to Basel II

(c) Common Elements of Basel II and Solvency II

42.2 VALUING INSURANCE LIABILITIES

42.3 SOLVENCY CAPITAL AND MINIMUM CAPITAL REQUIREMENTS

42.4 OPERATIONAL RISK MANAGEMENT

42.5 ISSUES FACING INSURERS IN IMPROVING OPERATIONAL RISK

42.6 ISSUES FACING INSURERS IN IMPROVING DATA INTEGRITY AND RETENTION

42.7 ISSUES FACING INSURERS MEETING IFRS AND SOLVENCY II

42.8 THE LAMFALUSSY PROCESS IN DEPLOYING SOLVENCY II

42.9 CONCLUSION

NOTES

42.1 INTRODUCTION

In banking think capital adequacy; in insurance think solvency. The concepts are closely related, and both are behind global initiatives that will transform the financial services industry.

Capital adequacy sets standards for the minimum level of a bank's equity in relationship with its assets as set by the Bank for International Settlements (BIS) through its Basel Committee. The new accords are known as Basel II. Capital adequacy measures financial strength and requires banks to have capital equal to 8 percent of their assets. The European Union's Capital Adequacy Directive established minimum capital requirements in the financial services industry and has been in effect since 1996. The Basel II capital accords go into effect in the next few years in the EU and other countries.

Solvency is used in the insurance industry to measure an insurer's ability to pay its debts with available cash. Solvency ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required