Insurance Consulting

Solvency II is the new regulation governing the insurance and reinsurance sectors. It was established to overcome the weaknesses of the Solvency I directive. The main objectives of this new regulation entering into force in 1^st January 2016 are:

• Strengthen the policyholder protection;
• Improve the prudential regulation;
• Improve the competitiveness of EU insurance companies;
• Deepen the single market.

Solvency II is based on three pillars:

• Pillar 1 : Quantitative requirements
• Pillar 2 : Qualitative requirements and supervision
• Pillar 3 : Prudential reporting and public disclosure

The quantitative requirements require from insurance and reinsurance companies to adopt a new calculation method of technical provisions and capital requirements in order to take into account all the risks to which theses undertakings are confronted.

Via the second Pillar of Solvency II, the insurance and reinsurance undertaking must set up a governance structure which includes four key functions:

• Risk management function;
• Actuarial function
• Internal audit function;
• Compliance function.

Finally under the last Pillar, Solvency II establishes standards of publication to improve the transparency towards the public, the shareholders and the supervisory authorities.

Our actuarial services are mainly of two kinds:

• We guide undertakings in « Pillar 1 » calculations;
• We support the actuarial function in accordance with Solvency II.

For « Pillar 1 » simulations, we calculate, among others:

• The best estimate of technical provisions;
• The risk margin;
• The Solvency Capital Requirement;
• The Minimum Capital Requirement;
• The Solvency ratio.

The support to the actuarial function includes:

• Coordinating the calculation of technical provisions;
• Ensuring the appropriateness of the methodologies and underlying models used as well as the assumptions made in the calculation of technical provisions;
• Assessing the sufficiency and quality of the data used in the calculation of technical provisions;
• Compare best estimates against experience;
• Informing the Board of directors of the reliability and adequacy of the calculation of technical provisions;
• Overseeing the calculation of technical provisions in case of insufficient data of appropriate quality;
• Expressing an opinion on the overall underwriting policy;
• Expressing an opinion on the adequacy of reinsurance arrangements;
• Contributing to the effective implementation of the risk management system;
• Designing of the actuarial report.

Our risk management services include at least the following deliveries:

• Defining or reviewing the risk management policies;
• Defining processes and procedures applicable to the undertaking;
• Assisting the companies Board of directors in the effective operation of the risk management system;
• Monitoring the risk management system;
• Monitoring the general risk profile of the undertaking;
• Detailed reporting on risk exposures;
• Advising undertaking’s Board on risk management matters;
• Identifying and assessing emerging risks;
• Own Risk and Solvency Assessment (ORSA). In particular :
  • Defining the ORSA policy;
  • Defining ORSA processes and procedures;
  • Evidencing and documenting each ORSA and its outcome;
  • Designing the ORSA report;
  • Assessing the overall solvency needs;
  • Assessing the compliance, on a continuous basis, with the capital requirements;
  • Assessing the compliance, on a continuous basis, with the requirements regarding technical provisions;
  • Assessing the significance with which the risk profile of the company deviates from the assumptions underlying the Solvency Capital Requirement.

With the entry into force of the Solvency 2 directive, captive reinsurance companies will also have to comply with new regulatory requirements. Rules of proportionality can apply. We can offer advisory services in the area of key functions and on calculations regarding quantitative requirements. We can also provide simulations on Solvency 2 as well as advice on the structuring and the set-up of Governance in general.