Will there be a Solvency III?

“I hope not! I think the real issue is whether we get the regulators that we want and the regulatory super-structure that we want. I don’t think we need a solvency III when we’ve estimated the risk at value, attitude of a 99.5 per cent certainty risk of value or 200-year event, what are we going to say? Are we going to say we have to do better than that?

“We’ve got to use the formula for the solvency capital requirements and the marginal capital requirements, the minimum capital requirements. We’ve got to make sure they work, we have the base of capital which is currently in existence, we are not going to change that at European level. We have the kind of international backdrop which means I don’t see much of the parameters for current solvency II framework changing.

“I do think that there will be additions such as the compensation schemes which don’t exist in certain states being ratcheted up, the insurance mediation directive being changed brought into line because of cross-border selling. It depends now on cross-border activity and group activity. I would like to see in three or four years time a review of group supervision after the introduction of the directive, to see whether or not we can get group support in as well. I think that was missing from the directive and we will have to go back to that so for me, economic diversification in order to be able to grow capacity, reduce premiums and keep security are the issues for where we go next in solvency II but I wouldn’t call it solvency III, I would say it is what is owed to solvency II that didn’t go through in the first draft. And there are things still to come back which I think would be very exciting for the industry and very important for appropriately balanced regulation which will leave Europe in a strong competitive place, but also a very secure one with modern standards to match.”