One year into Solvency II, BoE re-thinks “intrusive approach” to model approval

The Bank of England is reviewing whether its “intrusive approach” to approving Solvency II models can be streamlined without compromising standards, executive director of insurance supervision David Rule told the Association of British Insurers in a speech on how the directive was performing 12 months after implementation. The first round of approvals regarding major changes to firms’ internal models has been completed, and Rule noted that firms had proposed considerably more changes that reduced rather than increased capital requirements. The regulator intends to monitor the possibility that firms’ model estimates of capital will drift lower over time, he said.