Fifth Quantitative Impact Study on Solvency II published

The European Insurance and Occupational Pensions Authority has published its fifth Quantitative Impact Study (QIS5) on Solvency II. With less than 24 months to go before the Solvency II deadline – 31 December, 2012 – Deloitte Europe, Middle East and Africa Solvency II experts welcomed this important step on the road to the implementation of Solvency II, and underlined some key findings.

Solvency II, a European Commission directive, will provide a comprehensive new framework for insurance supervision and regulation. It is intended to introduce across the EU a more sophisticated, risk based approach to supervision and capital assessment, using modern techniques for market-based valuation of assets and liabilities.

Michel de La Bellière, Deloitte’s EMEA Solvency II leader, said: “QIS 5 is likely to be the last full-scale quantitative exercise before the date of Solvency II implementation.

“Reading the high participation rate in this light shows that most undertakings have now had the chance to measure what Solvency II will actually mean for their balance sheet, their solvency and ultimately, for their business”.

Tamsin Abbey, Deloitte’s Solvency II partner in the UK, added: “QIS 5 results show the impacts of these changes, the significance of which can vary between European markets and product lines, and are an important component in the establishment of a level playing field across Europe. In addition, QIS 5 also contributed to inform the search for a balance between the goal of achieving an economic measure of risks, and the expectation of keeping the Standard Formula simple enough.”

Rick Lester, Deloitte’s UK Solvency II leader, said: “Client experience has shown that individual results by entity and product line can depart from the average, due to each undertaking’s specific situation. Solvency II will have significant impacts on insurers’ strategies in terms of product, funding and investments. QIS 5 results are now one of the best tools available to inform the necessary reviews, as they allow individual entities to position themselves against the market.”

The aim of QIS 5 was to quantify the impacts of the proposed standard formula for the calculation of European’s insurers and reinsurers on their balance sheet and their solvency.