Portal de Periódicos da CAPES

Initial effects of Solvency II implementation in the European Union

2017; Volume: 65; Issue: 7-8 Linguagem: Inglês

10.5937/ekopre1708436k

2406-1239

Jelena Kočović, Marija Koprivica, Blagoje Paunović,

Insurance and Financial Risk Management

Solvency II as a new, risk-based regulatory framework for the insurance sector, setting high requirements in terms of capital adequacy, risk management and reporting for insurance companies, has been applied in the European Union as of January 1st, 2016. The paper deals with the analysis of the first effects of Solvency II on the insurers' balance sheet and solvency, based on the published statistical data. Risk margin sensitivity to interest rates, volatility of the capital, high and imprecise disclosure requirements, incompliance with international financial reporting standards and excessive conservatism of the standard approach are identified as key problems in the concept implementation, and possible ways to overcome these are proposed in the paper. It is concluded that continuous adjustment of Solvency II to the current macroeconomic trends is necessary for the purpose of its successful functioning in practice. Therefore, the process of developing this concept, despite the fact that its application has officially started, cannot be considered as terminated, or its methodology and parameters as permanently defined.