Solvency assessment for insurance groups in the United States and Europe - A comparison of regulatory frameworks

Abstract

As a reaction to the increasing trend of insurers forming and participating in financial conglomerates and insurance groups, supervisory authorities are currently developing group-wide solvency regulations. The International Association of Insurance Supervisors (IAIS) recently published an issues paper that discusses the challenges to group supervision and defines criteria for a thorough group solvency framework. Based on these criteria, this article provides an overview and comparison of three important approaches - the U.S. solo-plus approach of the National Association of Insurance Commissioners, Switzerland's group structure model and the Solvency II Directive on Group Solvency Assessment. The analysis reveals various deficits within the group regulation of the United States implying the need for future regulatory work. By contrast, the performance of the European frameworks with regard to the IAIS criteria is good. In particular, the Swiss framework can be seen as a prime example of an innovative and solid group solvency assessment. © 2013 The International Association for the Study of Insurance Economics.