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The Solvency II directive has been developed by the European Union (EU) to harmonize insurance supervision and to generate a greater consistency across the measurement of assets and liabilities of the insurance companies. Solvency II will require all insurers to formally assess their risks and their capital needed which will be subject to regular monitoring and reporting to regulators. The enhanced public disclosures are still under development and may conflict with existing and proposed international financial reporting IFRS requirements for insurance firms although the recent Quantitative Impact Surveys (QIS) have been heavily reliant on IFRS.
The insurers keep a close eye on parallel developments of those two major reforms. The extent of convergence between...
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