Understanding the standard approach and models in Solvency II

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<h1>Understanding the standard approach and models in Solvency II</h1><strong> Author: <a href='http://www.articleseen.com/profile_Jim Strange.aspx'>Jim Strange</a></strong><br /><p>Solvency II aims to establish a revised set of EU-wide capital requirements and risk management standards. Covering over 30 countries, it represents the biggest ever exercise in establishing a single set of rules for the European insurance industry. The development of any solvency system, including Solvency II, should be embedded in a wider framework or “Global View” as first proposed in a fundamental paper by the International Actuarial Association (IAA) in 2004. At first sight this sounds a rather abstract challenge but we are focusing mainly on the non-life insurance risk and demonstrate the advantages of such a philosophy by pointing out some new practical proposals which have emerged recently. The European Solvency II Directive is an updated set of regulatory requirements for insurance companies that operate in the European Union. It is due to be implemented in 2012, and replaces the current (Solvency I) requirements which have changed little in over 30 years. Areas of focus include: • Modeling issues • Ordering of risk issues • Statistical issues • Numerical issues Solvency II vs. Basel II Solvency II aims at establishing a new regulatory framework for the insurance industry, just as Basel II does for the banks. The three pillars developed under Basel II also provide a model for Solvency II, but from here-on the obvious similarities are limited. FRSGlobal is the only global provider of risk and regulatory solutions on a unified platform. This makes our solution uniquely appropriate for Solvency II's dual emphasis on both the MCR and SCR, and the evolution of a company's risk management and governance strategy. The functionality provided by the components of the FRSGlobal RiskPro (risk reporting) and RegPro (regulatory reporting) modules cover the Solvency II requirements. Diversification is taken into account using distinct correlation tables. All data is stored in a single DataFoundation and all risk calculations and subsequent reports evolve from this single data platform. The solution addresses four distinct areas of any Solvency II implementation project: 1. Reporting High quality, fully automated reporting illustrating capital quantification in order to add value to periodical statistical reports 2. Analytics Fast and flexible analytics in order to address the requirements of either asset or liability modeling, or any combination of the two 3. Software components A scalable, modular solution that is able to both complement existing reporting infrastructures as well as providing a complete risk-based capital requirement solution 4. Data management The ability to collect, parameterise and calculate any prescribed data set as the foundation of a customer's Solvency II initiative. All risk calculations and subsequent reports evolve from a single data platform. </p><strong>About the Author:</strong><br /><p>Register with FRSGlobal to be kept up to date with information relating to <a rel="nofollow" href="http://www.frsglobal.com/solutions/solutions-solvency.html">Solvency II</a></p><p> Article Source: <a href='http://www.articleseen.com/Article_Understanding-the-standard-approach-and-models-in-Solvency-II_54700.aspx'> http://www.articleseen.com/Article_Understanding the standard approach and models in Solvency II_54700.aspx</a></p>

Article Source : http://www.articleseen.com/Article_Understanding the standard approach and models in Solvency II_54700.aspx

Keywords : solvency ii,

Category : Business : Management