Regulating Insurance Groups : A Comparison of Risk-Based Solvency Models
Journal
Journal of Financial Perspectives
ISSN
2049-8640
Type
journal article
Date Issued
2013-07
Author(s)
Abstract
Since the 1990s, there has been extensive growth of financial groups involved in the insurance sector. As a result, supervisors and regulators are currently developing group-wide capital standards intended to enable effective monitoring of the financial soundness of such groups. Some jurisdictions are taking steps towards a consolidated approach, which views the group as one single integrated
entity, while others model the group as a collection of interrelated but separate legal entities. This paper provides a theoretical as well as a numerical comparison of these two approaches to group-wide solvency assessment in light of the different regulatory issues and challenges associated with consideration of group effects. As a benchmark case, we consider a "silo approach" that is based
on a solo assessment of the risks and solvency capital requirements of each legal entity within the insurance group. Our analysis contributes to the ongoing discussion about the best way to conduct group-wide solvency assessments.
entity, while others model the group as a collection of interrelated but separate legal entities. This paper provides a theoretical as well as a numerical comparison of these two approaches to group-wide solvency assessment in light of the different regulatory issues and challenges associated with consideration of group effects. As a benchmark case, we consider a "silo approach" that is based
on a solo assessment of the risks and solvency capital requirements of each legal entity within the insurance group. Our analysis contributes to the ongoing discussion about the best way to conduct group-wide solvency assessments.
Language
English
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
EY Global Financial Services Institute
Publisher place
London UK
Volume
1
Number
2
Start page
1
End page
13
Pages
13
Subject(s)
Division(s)
Eprints ID
69304