but their views vary widely regarding how it will unfold and what excess mortality fi gures will result. Although analyses of past pandemics provide an insight into possible future scenarios, a simple extrapolation of statistics can be highly misleading. However, the 1918 Spanish fl u is often used as a basis for projecting the possible impact of a severe pandemic.
Supervisory Powers - further advice' We welcome the opportunity to comment on this draft advice. The CRO Forum believes it is key to have appropriate harmonisation of supervisory powers, next to an adequate solvency system.
As recent terrorist activities in major cities - notably, the 11 September 2001 attacks in the United States - have made strikingly clear, terrorism has developed into a threat that affects every aspect of society and knows no national boundaries. Although there is no internationally binding defi nition of terrorism, some aspects can be agreed on: it seeks to cause human suffering, to instil widespread fear, and to disrupt life and business. The insurance industry has responded to this evolving hazard, and is doing all in its power to manage the terrorism risk.
The CRO Forum companies have developed internal capital models, which they expect to be approved by the regulators as a basis for setting the level of target capital ('SCR'). The CRO Forum companies have also participated in QIS3.
We have been an active participant in the Solvency II discussions that have taken place before the publication of the Solvency II directive promoting a risk-based and economic approach. We have therefore published a number of own initiatives papers on issues covering the cost of capital approach to market value margin (MVM), diversification benefits, internal models and financial risk mitigation and has responded to CEIOPS consultation papers.
The Chief Risk Officer (CRO) Forum's Emerging Risk Initiative is committed to continuously improving risk management. This paper advocates as best practice a process whereby insurers and reinsurers re-examine their assumptions about frequency, severity, loss trends and how the risks in their portfolios are interconnected and generally stress test their internal processes for hitherto "unthinkable" dimensions of risks. The paper seeks to address rating agencies, analysts, governments, regulators, intermediaries and risk modelling firms alike. This study is non-binding and for reference purposes only.
CRO Forum comments on Consultation Paper no. 20 "Pillar I issues - further advice" We welcome the opportunity to comment on this draft advice. The CRO Forum believes that the issues covered by this Consultations paper are key for the future solvency regulation. In this regard, the CRO Forum welcomes this Consultation paper, which develops further some of the points already discussed in the previous calls for advice. Since then, we believe that the QIS II exercise provided with a lot of useful information and feedback from the industry, and also that the political guidelines from the European Commission have been specified on a number of issues.
CRO Forum comments on Consultation Paper no. 16 "Pillar II issues relevant for reinsurance"
CRO Forum's response to CEIOPS Consultation Paper no. 17: draft advice to the European Commission in the framework of the Solvency II project on Pillar 2 capital add-ons for solo and group undertakings We welcome this Consultation Paper from CEIOPS. The CRO Forum supports the inclusion of powers for a capital add-on in the Solvency II framework directive. However, we must emphasise that capital add-ons should be seen as a last resort as expressed, for example, in article 136(2) of the EU's Capital Requirements Directive.
CRO Forum comments on Draft advice on Consultation Paper no. 19 "Safety measures (Limits on Assets)" The CRO Forum appreciates CEIOPS' further development of principles for the formulation and application of the supervisory tool 'Pillar II capital add-on', and welcomes the opportunity to comment on this draft advice.