QIS5: A checkpoint to steer Solvency II. Results will provide a tangible basis to assess potential outcomes of Solvency II. The CRO Forum welcomes and supports the efforts of the Commission and CEIOPS in moving Solvency II towards its final destination. This shows the commitment to formalise Solvency II on time, and attests the quality of the overall process. QIS5 is an important part of the overall development of Solvency II as an exercise to test options and inform the finalisation of the Pillar 1 of the Solvency II framework, of which results are due to be published by the Commission in April 2011.
The CRO Forum has always strongly supported Solvency II. The forum has been intricately involved in the development of the new regime, and will continue to contribute by means of feedback, and – where appropriate – by offering counterproposals supported by research and our own data used in our internal models.
Having reviewed the final QIS5 specifications, and conducting some approximate tests internally, the CRO Forum does not expect the overall net impact of the latest amendments on own funds and capital requirements to be materially different to that of the draft QIS5 Specifications, which looked very conservative compared to internal models. Therefore, the forum will test additional options to support the European Commission’s interpretation of the QIS5 results.
The Chair of the CRO Forum, Jean-Christophe Menioux, commented: “We trust that QIS 5 will provide the Commission with further grounds from which to adjust the implementing measures in accordance with the envisioned risk tolerance of a 1-in-200 year loss, not higher and not lower. QIS5 is not a re-negotiation of the terms of the Directive, but a way to find good practical solutions to fulfil the objective of having an economic risk-based framework as laid-down in the Level 1 text.”
The CRO Forum is confident that QIS5 will be a success and its participation, accounting for roughly 30% of the European Insurance market share, supports this initiative. As always the CRO Forum remains committed to support the forthcoming ongoing development of Solvency II.
The CRO Forum is a professional risk management group that focuses on developing and promoting industry best practices in risk management. The forum was formed in 2004 to work on key relevant risk management issues within the insurance industry.
The forum is attended by the Chief Risk Officers of major insurance companies (full members: AEGON, Ageas, AIG, Allianz, Aviva, AXA, Eureko, Generali, Groupama, Hannover Re, ING, Munich Re, Prudential PLC, Swiss Re, Zurich; associate members:ACE, Insurance Australia Group, Lloyds TSB, Manulife Financial, Old Mutual, Royal & Sun Alliance, Sun Life, Unipol).
The forum intends to represent large insurance company views, with three core aims:
• Alignment of regulatory requirements with sophisticated / best practice risk management;
• Acknowledgement of group synergies, especially diversification benefits; and
• Simplification of regulatory interaction.