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For life insurers in the UK, the risk margin is one of the most controversial aspects of the Solvency II regime. Following its implementation, the risk margin came under considerable criticism for being too large and too sensitive to interest rate movements. These criticisms are particularly valid for annuity business – such business is of great significance to the national system for retirement provision. This criticism has led to political interest, and the risk margin was a major element of the Treasury Committee inquiry into Solvency II.
The working party was set up in response to this criticism. Our brief is to consider both the overall purpose of the risk margin for life insurers and solutions to the current problems, having regard to the possibility of post-Brexit flexibility. We have concluded that a risk margin in some form is necessary, although its size depends on the level of security desired.
The paper covers our review of possible changes to the current risk margin, both within the existing methodology and considering a range of alternatives. It identifies a number of changes which should be considered, depending on future circumstances, for example relating to Brexit.
Timings | Programme |
---|---|
17.00 - 17.30 | Registration and refreshments |
17:30 - 17:35 |
Chair's Introduction Gareth Mee, Ernst Young |
17:35 - 18:00 |
Presentation Paul Fulcher, Milliman and Andy Pelkiewicz |
18:00 - 18:10 |
Opener Andrew Chamberlain |
18:10 - 18:50 | Q&A |
18:50 - 19:00 |
Close Gareth Mee, Ernst Young |
Location
Address
Staple Inn Hall, High Holborn London, WC1V 7QJ
Nearest Public Transport
Chancery Lane Station