The financial crisis and Solvency II

Following the recent banking crisis, the Basel II regulatory system faces criticism for failing to deliver market stability. This will make for interesting times as Europe seeks to implement the ambitious Solvency II regime for the insurance industry, according to Charl Cronje and Andrew Cox, partners at consultants Lane Clark & Peacock LLP.

It was all proceeding happily enough. European states had made unprecedented progress in agreeing most of the key principles of Solvency II, the biggest ever regulatory overhaul of the insurance industry. Then in September 2008, the trouble that had been brewing in the credit markets came to a head, fundamentally changing the landscape of financial services. This article looks at some of the implications of the crisis for insurers and for the future of insurance regulation. We also give our thoughts on what insurers should be doing now to prepare for the coming regulatory changes in Europe.