Vipond warns that technical teams will be over-stretched
ABI director of financial regulation and taxation Peter Vipond criticised the timing of yesterday’s announcement by Eiopa, (the European Insurance and Occupational Pensions Authority) that it is launching the second Europe-wide stress test for the insurance sector. The exercise, which will look at how insurers react to rising inflation and a downturn in the market, is due to be wrapped by the end of May 2010.
Vipond said: “The UK insurance industry is currently under great pressure to implement an enormously complex regulatory framework (Solvency II). Rather than demand stress tests on the basis of a yet to be agreed framework, it would be better to focus on finalising the proposed rules and helping the industry put the infrastructure in place to make them work by 2013.”
“We are also worried that many firms could be now be stretched as their technical teams will also be preparing internal models for use ahead of Solvency II at the same time as the stress test will run.”
The stress test, which is based on companies’ 2010 financial results, will be run by the FSA in the UK. Eiopa expects to publish the aggregated results of this exercise in July 2011.
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