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Risk and Solvency Regulation in Europe

In: Handbook of Insurance

Author

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  • Rene Doff

    (University of Amsterdam)

Abstract

The European Solvency II framework has set an example for insurance regulations across the globe. This chapter looks into Solvency II and investigates the outcome of the regulation since its implementation in Europe in 2016. Our analysis of Solvency II uses the building blocks of the 2017 Committee of Sponsoring Organisations of the Treadway Commission (COSO) enterprise risk management (ERM) framework. One benefit of Solvency II is a more consistent methodology to measure insurer solvency. Our analysis shows that insurers’ solvency ratios in Europe have declined since 2016 due to a better estimation of the true risks and a better valuation of the capital position. We also show that internal model outcomes for life insurers are better (higher) than their standard-model peers. For non-life, however, this effect is inverse. We conclude that scenarios would be a good methodology to explore climate change risks and that this is also the intention for incorporation in Solvency II going forward.

Suggested Citation

  • Rene Doff, 2025. "Risk and Solvency Regulation in Europe," Springer Books, in: Georges Dionne (ed.), Handbook of Insurance, edition 0, pages 483-500, Springer.
    • Handle: RePEc:spr:sprchp:978-3-031-69674-9_17
    DOI: 10.1007/978-3-031-69674-9_17
    as

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