Scandinavian Interim Regulation
Denmark - current regulatory environment
Denmark has implemented new interim rules that go a long way towards achieving the objectives of Solvency II as currently understood from QIS3. These new regulations commonly referred to as Solvency 1½ but officially called "Individual Solvency Rules" have been in effect since 1st July 2007. The new regulations require insurance companies to create actuarial models that quantify the various risks to be measured in order to ascertain the minimum required capital.
Sweden - current regulatory environment
Sweden has also introduced new regulations that move their solvency regulations toward Solvency II as interpreted from QIS3. These new regulations are called the traffic light system, and as the name suggests, involve insurance companies being awarded one of the three colours which in turn signal the company's degree of solvency. These regulations are also already in force with insurance companies being required to submit their information and, importantly, the basis and methodology behind the calculation, as computed from 1st half year 2007 figures. Note that these regulations are only testing national and international firms. Small local companies are currently not being rated. This could change as the Traffic Light System converges with Solvency II which in its current form will affect all firms with premium income of €5Million or higher.
Norway - current regulatory environment
Norway’s regulator (“Kredittilsynet”) has produced its own interim Solvency regulations which are being implemented in the first quarter of 2008. Kredittilsynet has to a large degree based these regulations on the EU wide Quantitative Impact Study 3 (“QIS3”) and will adjust these to capture the changes made in QIS4.
The new regulations like Solvency II are based around actuarial models that assess various risks on a firm by firm basis and from these calculations produce the company specific “Capital Buffer.” This value is the models version of Solvency II’s “Capital Requirements”. Resembling Solvency II again, these new regulations will involve periodic reporting to a central body (in this case Kredittilsynet) in order for them to monitor the company’s accumulated risk and capital adequacy.
