Most of the substantial argument has been well and truly aired by the local regulators, CEA, EIOPA and the chief forums, but always healthy to list the sticking points.
- Risk-free interest rate curve - application of illiquidity premium
- Cost of capital rate - lower than CEIOPS 6%
- Risk margin - divergence on which of the options is most realistic
- Own funds - treatment of EPIFP
- SCR Formula - Many aspects
- Holdings in particpations and subs
- SCR Internal Model - all looking for least burdensome option
- Pillar II dampener for Procyclicality - divergence in length of time
- Capital add-ons - working on what divergence between profile and SCR is a "significant deviation"
- Actuarial function - some tension on what will consist of applicable 'standards' for the profession post-Solvency II, including EIOPA's role as an enforcer
- Supervisory reporting - some fishing for less frequent reporting to evidence "concrete application of the principal of proportionality", due in part to Level 3 indications of complexity. More telling, a desire for 5-6 years of transitionals is also shown., as well as debate on what data should be audited, and how frequently
- Public disclosure - Straightforward defensive position from most respondents on avoiding disclosing competitive information, as well as views on what should be disclosed in order to benefit consumers and stakeholders
- Supervisory co-operation - coverage on how colleges should work
- Products - low capital charge products become high priority sales, with price rises likely for long-term guaranteed products and innovation in unit-linked world. End predicted for cross-subsidisation.
- Markets - diversification benefits will work against niche and smaller insurers. Maximise branch networks, more level playing field, and issues again with impact of proportionality if not applied adequately. Captives singled out as not deserving of special treatment
- Social - long term guarantee products the key issue flagged, namely whether they become prohibitively expensive and pressurise social security systems instead. Also a whole suite of suggestions about how it will impact on investment strategy, both asset type and duration.
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