I have been following emerging risk management regulations in the insurance industry with great interest. The two major Insurance Risk and Prudential regulations on the horizon with global impact are:

 

1.      Solvency II in Europe

2.      US Insurance Solvency Framework

 

Both regulations cater to the specific operating modalities of their respective markets, but will impact any companies operating globally. With the US adoption of its own Insurance Solvency Framework, it will be an interesting journey toward a globally accepted liquidity framework standard.

 

While Solvency II is already being adopted across many EU countries, the US Insurance Solvency framework is fairly recent. So before comparing the two approaches, I want to highlight the seven core principles of the US Insurance Solvency Framework:

 

1.      Regulatory Reporting, Disclosure and Transparency

2.      Off-site Monitoring and Analysis

3.      On-site Risk-focused Examinations

4.      Reserves, Capital Adequacy and Solvency

5.      Regulatory Control of Significant, Broad-based Risk-related

6.      Preventive and Corrective Measures, Including Enforcement

7.      Exiting the Market and Receivership

 

More on the design principles around the two approaches in my next blog.

 

Source: http://www.naic.org/documents/committees_e_us_solvency_framework.pdf