- An increased pressure and focus on business models
- A flight to core competencies
- A further change in consideration of business mix due to capital considerations for diversification
- A better understanding and crystallization of capital positions and more informed management of insurers
Guy Vanner, managing director at AKG Financial Analytics, observes: “All of this has also led to some shake-up in terms of activity in domestic European insurance markets, such as the UK, with merger and acquisition and revised market selection activity, as groups and companies sought to optimise their positions ahead of, or in light of, Solvency II.
“As a result of the impact of Solvency II on insurers, with whom advisers have key propositional relationships for existing and new business, there should be no doubting that its implications need to be considered by advisers.”
For advisers, the most important question to address is awareness.
Mr Vanner says: “Solvency II and the wider adoption of risk-based capital-oriented regulation should not be a source of worry, but the nature of the change and its significance for those insurer partners with whom business has been, might be or is done must be understood.
“The fundamental financial strength of insurers is not changed by Solvency II and the other risk-based capital approaches that might follow it elsewhere, but some of its composition and communication, for example in changed capital surplus and solvency coverage ratios in the new regimes, may be.
“While it comes at a cost, ultimately this development improves the identification of risk and capital requirements within insurer businesses for their benefit, in assisting their regulators and, ultimately, to the advantage of advisers’ clients.”
ima.jacksonobot@ft.com
