Bernardino baffled over Solvency II capital fears
EUROPE - Gabriel Bernardino, chairman of insurance and pension supervisor EIOPA, has dismissed the ongoing debate over whether capital requirements under Solvency II would hurt European insurance companies.
At a press conference in Vienna, he pointed out that each company was free to use its own internal models to assess capital requirements.
"Under Solvency II," he told IPE, "there are various possibilities to make your own calculations - under supervision, of course."
He also pointed out that, in the standard model, "we needed some simplicity", which "is of course calibrated to a European average" and therefore does not suit every company's individual requirements.
He said he was convinced that every company would be able to calibrate risk assessments to better fit its own risk structure using internal models.
On the question of whether volatility has increased under Solvency II, EIOPA's chairman said volatility was "not in Solvency II but in the markets".
He stressed that both the insurance and the pensions industries needed "more reality" in their risk management.
"Risk assessments that deny market reality are not the answer and help to preserve schemes that are clearly unsustainable," he said.
Bernardino reiterated that there would be no "copy and paste exercise" regarding Solvency II for pensions, but he acknowledged that "certain elements" were currently being assessed to test their applicability.
One of those is the holistic balance sheet (HBS) approach, which will be tested in the first-ever quantitative impact study for the pension industry, set for this autumn, although Bernardino could not provide an exact date.
"HBS can be a relevant instrument in the direction of further reality in the field of solvency of pension funds," he said.
As for the implementation of Solvency II, Bernardino noted that he thought January 2014 was "still possible" as a starting date.
However, he added that a transition period would be needed for various insurers, as well as for any new requirements for pension funds.