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Risk Management in the Insurance Industry: A Comparison of Solvency II to U.S. Insurance Regulations

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  • Deborah L. Lindberg
  • Deborah L. Seifert

Abstract

Solvency II is being enacted in the European Union (EU) to increase risk-based capital requirements and to reduce insurer failure rates to near zero (KPMG,2011). Many speculate that U.S. firms will be affected by the Solvency II regulations—not only because some insurers have an EU parent or subsidiary, but also because ofa belief that increased risk-based capital requirements will likely become the newexpectation around the world (Hay, 2011). Consequently, the cost of Solvency IIimplementation is a concern for both EU and U.S. insurers (Tuohy, 2011). However,others argue that the U.S. insurance industry already has a strong risk-based financialsolvency system in place, so additional regulations may not be needed to achieverecognition as being Solvency II–equivalent (NAIC, 2010; Veysey, 2011). The debateover Solvency II will continue for some time to come as the implementation date in theEU has been pushed back to January 1, 2016.

Suggested Citation

  • Deborah L. Lindberg & Deborah L. Seifert, 2015. "Risk Management in the Insurance Industry: A Comparison of Solvency II to U.S. Insurance Regulations," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 38(2), pages 233-243.
    • Handle: RePEc:wri:journl:v:38:y:2015:i:2:p:233-243
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    Cited by:

    1. Nora Gavira-Durón & Daniel Mayorga-Serna & Alberto Bagatella-Osorio, 2022. "The financial impact of the implementation of Solvency II on the Mexican insurance sector," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 47(2), pages 349-374, April.
    2. Basse, Tobias, 2020. "Solvency II and sovereign credit risk: Additional empirical evidence and some thoughts about implications for regulators and lawmakers," International Review of Law and Economics, Elsevier, vol. 64(C).

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