WHAT IS SOLVENCY II AND HOW IT AFFECTS CONSUMERS

WHAT IS SOLVENCY II AND HOW IT AFFECTS CONSUMERS

In recent months it has heard much of Solvency II. For the professionals of the sector, this is not anything new, but for the rest of us may be a term 'rare' and even alarming. In this article we will explain in a simple way that it is that of Solvency II and, above all, how it affects us consumers from insurance.

From 1 January 2016, Solvency II is the new system of risk assessment and calculation of capital requirements for insurance. I.e., Solvency II is the new system of solvency, which is based on risks, i.e., where the risk profile is the key element. Because the risk exists, it is not something invented to sell more insurance. In fact, if there were no risk there was no business for insurers.

Change bringing Solvency II is not related with the definition of risk, but with the management of that risk. It is an innovative system that seeks to optimize the value/risk using integrated management systems with the aim of seeking better trained and more solvent entities.

In this sense, Solvency II aims to provide the sector of insurance and reinsurance in an updated regulatory framework enabling companies to reduce risks, increase its competitiveness and improve the products offered.

Solvency II is built around three pillars: quantification of risks, qualification and evaluation and dissemination and transmission of information between regulators and customers.

SOLVENCY II DOES BENEFIT CONSUMERS

Solvency II benefits insurance companies, despite the hard work that must be made to adapt, is a fact. But, we also benefit consumers?

The truth is that Yes, Solvency II also benefits consumers, since that it makes the risk management is a transparent process. In a moment in which citizens and consumers are calling for greater transparency in all matters that affect us, Solvency II comes to respond to that demand.

This transparency will favour that there is more and better information, in addition to more and better competition. And is that much more information has held operations of insurers, more clear, the consumer will be what are the best companies, both in regards to products as to rates and services.

The fact that Solvency II establishes criteria for the management of the risk of insurance companies, will make their products more reliable and appropriate to the needs of the consumer.

These are some of the objectives pursued by Solvency II that will favor the consumer:

1. Reduces the risk to an insurer that may not meet claims.
2. If a company that is unable to meet the demands are reduced losses of the insured.
3. If the capital falls below the required level supervisors will be notified so that they intervene.

Thanks to these measures, the insurance sector will gain confidence and stability, and the consumer will get more guarantees regarding the products you hire.