Europe

French insurers count cost of Solvency II

Implementation of the requirements of the European Union’s Solvency II for risk-based capital requirements will cost French insurers in the region of €1.2bn ($1.75bn), according to a study published recently by consultants Sia Conseil. The top 10 French insurers will need to invest between €20mn and €49mn apiece for an aggregate expenditure of some €335mn. The new requirements, which are likely to be approved by the European Parliament either later this year or early in the new year, and are likely to take effect from 2012, and are expected to leave individual insurers some room for manoeuvre. The most important of these areas is likely to be whether companies use internal risk modelling to calculate capital requirements more precisely than the standard requirements. According to Sia Conseil, operating individual risk modelling could push up costs by 25% from the base cost, but could lead to savings of between 20% and 45% of capital required.