From: Captive.com/IRMI
Solvency II is a European Union directive that sets comprehensive regulatory standards for insurance and reinsurance companies operating within the EU, including captive insurers. Implemented in January 2016, it replaced the Solvency I regime, which was widely regarded as outdated and structurally deficient.
The directive aims to achieve several key objectives.
- Safeguard the interests of policyholders and beneficiaries
- Enhance transparency, comparability, and competitiveness in the insurance market
- Minimize the risk of insurer insolvency
Solvency II outlines requirements across critical domains such as financial resources, governance and accountability, risk management, supervisory oversight, and reporting and public disclosure. Its risk-based framework evaluates insurers’ solvency in a way that promotes efficient capital allocation, balancing risk and shareholder returns.
