Solvency II: Central Bank publishes Irish QIS5 results

Solvency II: Central Bank publishes Irish QIS5 results

The Central Bank of Ireland has published its "Summary of Irish Industry Submissions for QIS5". 

The report notes that:

There was very strong participation in QIS5, with 220 full quantitative submissions. This represented 81% of the companies that will be impacted by Solvency II and was more than three times the number participating in QIS4.

The majority of companies met the Solvency Capital Requirement (SCR) from existing resources but about 20% did not meet this requirement. About 5% failed to meet the lower Minimum Capital Requirement (MCR).

The vast majority of life companies saw an increase in their surplus capital under QIS5 relative to Solvency I, with other undertakings tending to see a fall in surplus capital.

The main issues arising in QIS5 were:

1. Complexity, in particular in relation to (a) Counterparty Default Risk and (b) Non-Life Catastrophe Risk (method 1). The Risk Margin element of the technical provisions was also considered excessively complex;

2. The calibration of the Non-Life Underwriting Risk;

3. Contract Boundary (i.e. the end of the policy for the purposes of calculating technical provisions and capital requirements) and Expected Profit In Future Premiums.

Read the Central Bank's report here: