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EU Parliament Approves Solvency II

Solvency II, the new framework for insurance regulation in the European Union, was approved recently by the EU Parliament for implementation in 2012. It is expected to streamline insurance regulation and cut costs by authorizing the regulator in a company’s home nation to take the lead in supervising the company. This will replace the present system where companies are responsible individually to regulators in each country where they do business. The new regime will require companies to comply with capital standards that correspond to their risk exposure. If a company’s capital falls below the minimum required, it may lose its license.
The new rules are expected to restore confidence and protect “against a repeat of the disastrous excessive risk taking by financial institutions, including certain insurance operators, that has contributed to the global crisis” said Jose Barroso, President of the EU Commission.