Aon Benfield has launched the “CRO Guide to Solvency II”, a new report aimed at helping chief risk officers (CROs) maintain a competitive position and boost financial strength while meeting regulatory compliance.
The study attempts to unravel the complexities of Solvency II and provide practical advice for successful implementation.
As such, it includes an overview of the current Solvency II landscape and highlights key areas of best practice.
According to the reinsurance intermediary, all insurance company professionals involved in Solvency II can benefit from the insights, which can help them understand the demands of the CRO and how to optimise the flow of information to board level.
Key pieces of advice in the guide include:
Reinsurance remains the best mechanism for mitigating the risks and associated capital charges under Solvency II – since most firms target a Solvency II ratio substantially above 100%, the effect of leverage on required capital makes reinsurance more cost efficient than raising additional equity in today’s market.
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.
Operational risk management should be developed for business rather than for regulatory considerations – accurate and complete risk information, as well as a good capital model and insurance mitigation programme, can really add value.