In an address to a Financial Regulator Solvency II Insurance Forum this week, Jonathan McMahon, Assistant Director General, Financial Institutions Supervision, urged companies to allocate significant resources to the implementation of Pillar 2 (risk management and governance) and Pillar 3 (supervisor reporting and disclosure) of the Solvency II framework. He commented that the implementation of Basel II (The Capital Requirements Directive) led banks and regulators to place too much importance on models and their outputs. He stressed that, while high quality models are important, risk management ultimately depends on intelligent human intervention.
Mr McMahon also referred to the recently-published proposals on corporate governance for banks and insurance companies, saying: “We consider these proposals appropriately update our regulatory regime, and in the process create a firm regulatory foundation for effective corporate governance”.
He also mentioned other initiatives, including publication of a consultation paper on Investment Guarantees / Variable Annuities and plans to engage later this year with the reinsurance industry on the design of the future regulatory regime for the sector.
Presentations to the Solvency II Insurance Forum:
Andrew Mawdsley : Solvency II Overview