Solvency II is the new European Union regime that regulates the solvency requirements for EU insurers and reinsurers. Solvency II aims to reduce the risk that an insurer would be unable to meet claims, to provide early warning to supervisors so that they can intervene promptly if capital falls below the required level, and to promote confidence in the financial stability of the insurance sector. Solvency II not only sets out the minimum capital requirements to guarantee policyholder protection, but also includes measures to stimulate risk management and good governance and to improve transparency. While the Solvency I regime only sets basic solvency standards, Solvency II has a much wider scope. Solvency II aims to unify the regulation of the European insurance market, as well as to increase policyholder protection. And, as suggested by this book's subtitle, Solvency II is good because: it improves the protection of policyholders, it creates an incentive for good risk management, it recognizes the economic reality of a group, it establishes market transparency, and it provides for a modern risk based supervisory regime.
