San Francisco, CA, USA
November 17, 2009

The Future of Insurance Solvency Regulation and Technology in the US

Report Published by Celent

The issue of solvency has moved front and center for insurer boards, senior managers, regulators, and rating agencies. To respond successfully, insurers must map how they will control their futures. To do so, they must have the right technology and use it properly.

The financial crisis and recession make significant change in US solvency regulation more likely. In a new report, The Future of Insurance Solvency Regulation and Technology in the US, Celent examines how the financial crisis will change solvency regulation.

Celent believes that the direction the NAIC and the state Departments of Insurance will take is broadly similar to the Solvency II Framework Directive recently adapted by the EU for a 2012 implementation. However, insurers in the US cannot wait for complete certainty. Rather, they should follow four broad principles: view changing solvency requirements as an opportunity; use an ERM framework to embed solvency management in operations; build the solvency technology stack deliberately; and make solvency metrics transparent.



"If insurers have learned nothing else from the financial crisis, they now know that the range and size of risks they face are more difficult to predict than previously thought," says Donald Light, senior analyst with Celent's Insurance Group and author of the report.
 
"The responsibilities of all US insurers to their policyholders and owners require improved solvency practices. For most insurers, building better solvency capabilities and practices will take a number of years. It would be a mistake to wait for the NAIC/DOIs/rating agencies to act first,” he adds.

The 26-page report has five figures. A table of contents for this report is available online.

Members of Celent's Property/Casualty Insurance, Life/Health Insurance , and Finance & Risk research services can download the report by clicking the icon to the left. Non-members should contact info@celent.com for more information.

 

About Celent

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally experienced analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

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