Solvency II and the Solvency Capital Requirement for Insurance Firms in Israel

15/04/2008 |  Wiener Zvi
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Solvency II and the Solvency Capital Requirement for Insurance Firms in Israel
Zvi Wiener
Abstract
Recent developments in the insurance regulation emphasize risk management. The European regulators are going to implement the new capital requirements that are directly based on the risk taken by insurance companies. This framework is called Solvency II and it is expected to be implemented in Europe in the next few years. In the paper we describe various approaches to risk measurement and management in insurance, and describe the potential implications of Solvency II on the Israeli insurance companies in terms of capital and their risk appetite. Our results are based on QIS2 study, and they indicate that under the new regulations Israeli insurance companies will be required to keep much more capital (or change their risk exposure). We provide some international comparison and try to send an early warning signal to the relevant parties (regulators and insurers).
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