Solvency II: Fund Competitiveness In A Regulated Insurance Industry

The Solvency II Directive came into effect on 1 January 2016, setting new capital requirements based mostly on the risks embedded on the asset side of balance sheets. This, in turn, implied the need for a look-though process of the investment funds held in insurance companies' portfolios. Indeed, the Quantitative Report Template (QRT) and Solvency Capital Requirements (SCRs) are now forcing insurers to process and report data with a high level of detail and granularity, in order to obtain an accurate view of the risks. Not applying a look-through principle for investments leads to a penalty, an "equity charge" of 49% for insurers under Solvency II (instead of 10-15% depending on the investment).