EC will make alternative too expensive to be considered

Insurers that fail to carry out risk modelling could fall behind the requirements of Solvency II, the ABI has warned.

ABI director of financial regulation and taxation Peter Vipond gave the warning following the release of the latest consultation paper on the regulation.

Risk modelling involves the mathematical assessment of probabilities.

Vipond, speaking at the Future of General Insurance conference in London last week, said: “The [European Commission] are going to make it impossible for a firm that does not model to do certain lines of business. It will be very expensive to do it; in capital terms it will not be worth doing.”

Insurers have until 11 December to respond to the consultation, which focuses on the implementation of Solvency II.

Vipond said: “If you are not reading it, then you need to make sure that somebody in your company has read it and knows what is at stake.”