Newsletter February 2010: Serious damage possible to business models

The business models of several insurers will be seriously damaged if the results of its study hold, the report by insurance research firm EMB says. For complex insurers and reinsurers, the standard formula approach is unlikely to be representative of the true underlying risk profile. EMB says companies should ensure they undertake specific parameter reviews and build internal models which are tailored to each company. These are subject to regulatory approval and adequate planning is therefore needed. “The clock is already ticking and the results of our study should add further impetus to firms’ Solvency II implementation plans. The cost of failure just became much higher,” EMB says.