Share on Facebook Share on Twitter Share on Google+ Share on Linkedin Solvency II will be implemented on 1 January 2016. At the recent European Insurance Forum (EIF) in Dublin, WRIN.tv speaks with Karel van Hulle, who was responsible for the early development of Solvency II and is known as the “Father of Solvency II.” He is currently an Associate Professor at the Goethe University in Frankfurt and Chairman of the Insurance and Reinsurance Stakeholder Group of EIOPA. He looks back at the origins and evolution of the EU Directive, the frustrations of politics and the future of global insurance regulations, despite obstacles. When he was first asked to develop Solvency II, Mr. van Hulle says insurance regulations had not changed in over 30 years and the regulatory system was outdated. According to Mr. van Hulle, “It was a system that did not attach any balance to the qualitative sides of supervision… that did not (address) group supervision…and most importantly, (had no) early warning signal…Solvency II was supposed to change all these things.” The original objectives for Solvency II were to improve risk management by putting responsibility for running the insurance back to management. Mr. Van Hulle says, thanks to Solvency II, management is required to conduct their own risk and solvency assessment. The financial crisis highlighted a number of areas within Solvency II that had to be amended. Due to the low interest rate environment, the calculations for a company’s capital requirement had a lot of volatility. Solvency II had been developed on a “principal based approach” so management would not just check the box. Unfortunately, to explain volatility, it was necessary to go into more detail. Mr. van Hulle says a new technical structure on how to value risk had to be developed as well. Finding agreement between 5,000 insurance companies, 27 member states and 700 members of the European Parliament is not easy, Mr. van Hulle recalls. It is very difficult to find a level of trust between Supervisors and the industry which leads to the need for more detailed rules. Politics also caused problems as well. The next major challenge is going to be global solvency and capital standards at the international level. Mr. van Hulle has had many conversations with the NAIC and other regulatory bodies. He sees a lot of debate around who is in charge. He had similar debates in Europe, but “we passed that stage now.” Mr. van Hulle suggests that people put their “mindset on the future, not on defense of the past.” It is important that countries work together. For more World Risk and Insurance News from the 2015 European Insurance Forum (EIF) Conference in Dublin, visit the dedicated EIF 2015 Channel in the WRIN.tv On Demand Library.