‘UK Executive board members must evidence a superior level of challenge regarding the complexities of Solvency II regulations or face losing their FSA approval’.
This was just one of the tough messages of reform that were applauded by leaders from the global mutual insurance industry during the recent ICMIF Solvency II Solutions Seminar which took place on Thursday, May 25, 2012 during a ‘closed door’ private seminar in London, UK.
More than 50 ICMIF members and specially invited guests assembled at the Willis Building, London to discuss how the mutual insurance industry can thrive within the complex Solvency II regulatory landscape.
In his keynote speech, advocate for the mutual sector and leading insurance specialist, Jonathan Evans, MP, praised the sector for its commitment to its customers’ long term interests and urged it to further challenge its boards’ expertise in Solvency II. He cautioned that in the UK, the regulator was already withdrawing approval for Non-Executive Directors who can not demonstrate a satisfactory appreciation of the impact that the new regulation will have on their businesses. This, he said, was just a taste of more to come.
Mr Evans went on to emphasize the insistence by the FSA that Non-Executive Directors must be able to evidence a superior level of challenge on issues such as the development of internal models. He also highlighted that EIOPA (European Insurance and Occupational Pensions Authority) would play a vital role in ensuring that there is consistent enforcement across Europe.
However, with news of budget cuts at EIOPA and delays at the FSA, Mr Evans concluded that the roll out would be a challenge for everyone; but worth the struggle.
From the panel discussions and presentations that took place throughout the day, it was clear that the mutual sector was keen to embrace all of the challenges of the new regime and look for ways that the new regulation could help strengthen their risk management controls and ultimately their relationship and affinity with their members and customers.
One of the panellists, Julian Skelton, Financial Risk Manager, NFU Mutual, UK, said: “Ultimately Solvency II will promote risk management amongst senior management and their boards. This can only lead to better business and ultimately an improved outcome for our members.”
However, calling for a need to get the balance right, he argued that there was a risk of overkill in terms of validation and evidencing board challenge. “Costs can easily spiral out of control as we seek to meet the current requirements and those costs will ultimately be met by our members.”
The seminar was delivered by a number of mutual insurance specialists who are also Supporting Members of ICMIF including:
- Global reinsurance broker – Willis Re
- Multi-line re-insurer – PartnerRe
- The world’s oldest insurance rating agency – A.M. Best
- Global financial services risk management consultants – Risk Dynamics
- One of the world’s leading global investment managers – Invesco
Boasting a truly international guest list, mainly from Europe, but also from as far as Japan, the event equipped the mutual and cooperatively minded delegates with a toolkit for making the most out of the changing regulatory landscape.