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Solvency Assessment for Insurance Groups in the United States and Europe—A Comparison of Regulatory Frameworks

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  • Caroline Siegel

    (Institute of Insurance Economics, University of St. Gallen, Tannenstrasse 19, St. Gallen CH 9000, Switzerland)

Abstract

As a reaction to the increasing trend of insurers forming and participating in financial conglomerates and insurance groups, supervisory authorities are currently developing group-wide solvency regulations. The International Association of Insurance Supervisors (IAIS) recently published an issues paper that discusses the challenges to group supervision and defines criteria for a thorough group solvency framework. Based on these criteria, this article provides an overview and comparison of three important approaches—the U.S. solo-plus approach of the National Association of Insurance Commissioners, Switzerland's group structure model and the Solvency II Directive on Group Solvency Assessment. The analysis reveals various deficits within the group regulation of the United States implying the need for future regulatory work. By contrast, the performance of the European frameworks with regard to the IAIS criteria is good. In particular, the Swiss framework can be seen as a prime example of an innovative and solid group solvency assessment.

Suggested Citation

  • Caroline Siegel, 2013. "Solvency Assessment for Insurance Groups in the United States and Europe—A Comparison of Regulatory Frameworks," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 38(2), pages 308-331, April.
    • Handle: RePEc:pal:gpprii:v:38:y:2013:i:2:p:308-331
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    References listed on IDEAS

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    1. Damir Filipovic & Michael Kupper, 2007. "On the Group Level Swiss Solvency Test," Research Paper Series 188, Quantitative Finance Research Centre, University of Technology, Sydney.
    2. Anton van Rossum, 2005. "Regulation and Insurance Economics," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 30(1), pages 43-46, January.
    3. Patrick Darlap & Bernhard Mayr, 2006. "Group Aspects of Regulatory Reform in the Insurance Sector," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 31(1), pages 96-123, January.
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