Aon Benfield, the global reinsurance intermediary and capital advisor of parent company Aon, has launched the CRO Guide to Solvency II to help chief risk officers maintain a competitive position and boost financial strength while meeting regulatory compliance.
It aims to unravel the complexities of Solvency II and provide practical advice for successful implementation.
The guide is structured around the three pillars of Solvency II under the themes of capital management, risk management and data quality.
Reinsurance remains the best mechanism for mitigating the risks and associated capital charges under Solvency II, according to the guide. As many firms target a Solvency II ratio above 100 percent, the effect of leverage on required capital makes reinsurance more cost efficient than raising additional equity in today’s market.
It adds that making the link between optimising return on capital, managing the volatility of results and delivering within risk appetite is a good way to incentivise senior management to use the results of internal models in strategic decision making.
Marc Beckers, head of Aon Benfield analytics for the EMEA region, said: “Regardless of the actual implementation date of Solvency II, the CRO will still be accountable for driving the success of risk management within an insurance company. The CRO’s responsibility reaches across the three pillars and their role is crucial in shaping the business to be successful under the forthcoming new regime.”
“Furthermore, the CRO connects and collaborates with the roles across an insurance company—from board to actuary or catastrophe modeller—that are involved in achieving and embedding regulatory compliance. Our guide highlights some of the key challenges firms face, setting out best practice to overcome these hurdles in the most effective way.”
