Uncertainty surrounding Solvency II takes centre stage in industry debate
Is the insurance industry on its way into a straitjacket with regard to regulations? That was the topic of the first panel discussion at the DVS symposium, hosted by Daimler Insurance Services chief executive Hanns Martin Schindewolf.
The line-up on the platform promised an interesting discussion: Andreas Berger, a board member of Allianz Global Corporate & Specialty; Stefan Materne, professor at the University of Applied Sciences in Cologne; analyst and adviser Carsten Zielke; and Ingo Zimmermann, head of insurance at technology company EADS. All of them are known for their straight talking.
Solvency II focus
The European framework for the risk-based determination of equity capital, Solvency II, formed the centre of the debate.
“From my point of view, risk-based capital as envisaged by Solvency II is the right approach,” said Materne. But that does not mean the framework is perfect in every detail, he added.
For Berger, the main problem is that it is still unclear when the rules come into effect – an uncertainty that is confusing shareholders and analysts.
Solvency II is not seen as the only problem. “We have a confusing variety of rules,” said Berger. He pointed out that new accountancy rules being developed at the same time as Solvency II were adding to the uncertainty.
“Because of this, analysts hardly understand the industry – it is too complex for them,” he said.
Climate of uncertainty
Analyst Zielke confirmed that the capital markets reflect such uncertainties.
“Insurers’ share prices are indeed low,” he said. This is partly the fault of the insurers, he said, because they have concentrated on the passive side of the balance sheet – the insurance risks. Because of that, they have problems fulfilling their promises in the current low interest rate environment.
However, a strong capital base alone brings no safety, added Zimmermann. Sufficient capital does not help if the business model is not sound.