Solvency II Look-Through

Introduction

Solvency II, which came into effect on 1 January 2016, introduces a risk-based approach to the supervision of insurance companies. This approach includes risk-based solvency requirements for insurance companies designed to ensure that risk is measured on consistent principles and that capital requirements are aligned with the underlying risks of the insurance company concerned.

In order to facilitate this risk-based approach, Solvency II requires a greater level of disclosure, transparency and reporting from insurance companies in respect of the assets in which they are invested. This more detailed information on assets is required for regulatory reporting and solvency capital requirement calculations. Obtaining this asset information also facilitates compliance with the prudent person principle and assists in maintaining an effective risk management system as part of the system of governance.