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Solvency II Implementation Challenges in Small Transitional Countries
The current regime, Solvency I, took some time to be appropriately adopted in all counties obliged to implement the system. At the beginning, the implementation of Solvency I was a challenging issue, but these days that is the history for most developed countries. Unfortunately, we cannot conclude the same for transitional countries.
As logical consequence of the financial sector transition in last decades, European Union financial authorities was trying to define the new, better solvency assessment system that could be adopted in most countries in the Union. That procedure was officially started in 2006 and it is still not done.
All EU members will be obliged to implement the system, at least its standard part. All more sophisticated measures are left for the countries’ insurance companies and/or supervisors to decide either to implement or not.
When discussing the developing countries, that are knocking at the EU door, the insurance directives implementation possibilities is one of very important questions. Given the importance of small countries’ stabilization and association procedures, the financial sector if one of its key elements. When it comes to insurance, solvency measurement is, at the time being, the most challenging part of it.
Challenges are numerous, and as the most demanding ones are related to lack of data, inappropriate knowledge and continuous education. Also, the supervisors are not aware of their importance in the whole process. The survey concluded between actuaries in insurance companies, has also identified some other important issues that will be elaborated in paper further.
The intention of the paper is to make clearer the key challenges of Solvency II regime implementation in small transitional countries, considering the small countries characteristics and the Solvency II complexity.
