Assessing the appropriateness of the Solvency 2 standard formula

During 2016, all Irish insurance undertakings are required to perform an assessment of the appropriateness of the standard formula as part of their Own Risk and Solvency Assessment (ORSA) process. This year we expect to see an increased focus on the assessment following the full implementation of solvency 2 in January. The Insurance Quarterly published by the Central Bank of Ireland (CBI), rated the appropriateness of the standard formula as "amber", which meant "firms meet some of the requirements but there is a need for further improvement". This is a key area of focus for the CBI this year. Their plans for 2016 include "detailed reviews of the ORSA documents, including Own Solvency Need assessments and the appropriateness of the standard formula, where relevant