Erik Bølviken: Where models meet reality - The Solvency II regulation of European insurance
Erik Bølviken (University of Oslo) gives a lecture with the title: Where models meet reality - The Solvency II regulation of European insurance
The Solvency II regulation of the European insurance industry came into force on January first last year after 15 years of work by EIOPA (European Insurance and Occupational Pensions Authority). I shall outline ideas and design and discuss whether the stated Solvency II goal of 99.5% solvency per company per year is likely to be true. Regulation of strongly random phenomena like those in insurance is typically a compromise between modelling accuracy on one hand and simplicity/transparency on the other, and there are several (or even many) loose threads in the Solvency II system that beg for changes.