Tue 18 - Thu 20 November 2008 - Frankfurt am Main, Exhibition Grounds, Hall 5.1
Advance preparation
21 September 2005 Frankfurt am Main – Solvency II, the new supervisory model for insurance companies, will impact organisational structures, processes and the overall data processing environment in companies. It is necessary to begin preparing for this new framework today.
Much like Basel II, a set of guidelines for capital requirements imposed on European banks some time ago, Solvency II will soon confront the European insurance industry. This supervisory model requires insurance companies to present the actual risks of their products and clients in the most transparent manner possible. Despite the fact that these new regulations are likely to first take effect in 2009, and that only the basic framework conditions have been defined so far, management consultancies like Tillinghast Towers Perrin strongly urge the insurance industry to start preparing risk management systems for Solvency II now. After all, they are considering how this model will impact entire firms in the future: Insurance companies will be responsible for defining their products and prices, administration, senior management, business cycles and terms of competition using their individual risk management system. This is a huge difference from today’s requirements, which focus exclusively on financial factors such as damage or contribution values.
Consulting firms like IBM liken this development to a quantum leap in the risk management requirements levied at the company and group level. “Since the company’s equity position will be oriented to their actual risk situation in the future, firms will have to go to great lengths to implement internal risk management systems that cover both risk analysis and monitoring”, predicts Thorsten Wolter, Partner at IBM BCS. The concept of Solvency II would affect organisational structures, processes and the requirements that define which insurance data within a company is subject to analysis. At the same time, Solvency II offers the opportunity for companies to establish an effective risk management system that would control every aspect of the insurance business, says Thorsten Wolter from IBM.
While many factors still remain unclear – such as the date as of which Solvency II is to take effect and the concrete contents of the new equity capital regulations – the European insurance industry must now consider how to best prepare for the changes and challenges that lie ahead. Tillinghast recommends that insurance companies follow these five steps:
1. Improve internal knowledge and competencies while developing and implementing new tools and techniques.
2. Review products and identify the options and guarantees they offer.
3. Create flexible valuation systems in order to effectively and quickly respond to the development of new supervisory systems and accounting standards.
4. Consistent evaluation of risk, capital requirements and added value.
5. Initiate concrete measures, e.g. introduce new products with low guarantees that lead to lower capital requirements.
Concrete offers from companies such as IBM are already available: Workshops targeted at senior management for the strategic positioning of Solvency II or preliminary studies that can be used to evaluate the need for changes in risk management based on the new Solvency II regulations. In addition, companies will design and implement methods for insurance-specific risks, investment risks, credit risks, operational risks, asset/liability management (ALM) and risk-related insurance management.
This year, E.B.I.F. will look at the latest topics impacting the insurance industry at events such as “IT Products for the Insurance Industry” and “The Future of the European Insurance Industry”. For more information, see www.ebif.com.
8th Euro Finance Week: 14 – 18 November 2005
E.B.I.F. Conferences: 14 – 17 November 2005
E.B.I.F. Trade Fair: 15 – 17 November 2005
Frankfurt European Banking Congress (EBC): 18 November 2005
Finanzplatz Gala: 18 November 2005
Parallel to the trade fair: LinuxWorld Conference & Expo
