EU: Solvency II – Comité Européen des Assurances (CEA) Calls for Risk-Sensitive Approach to the Calculation of the Minimum Capital Requirement (MCR)

On 10 June 2008, the CEA issued a press release stating that it believed that failure to adopt a risk-based approach to the calculation of the MCR would perpetuate the disadvantages of the current regulatory system, Solvency I. Michaela Koller, director general of the CEA, said that, “Approaches to calculating the MCR that are not consistent with the overall system could jeopardise the effectiveness of the whole Solvency II regime” and called for the MCR to be linked to the solvency capital (SCR) requirement so that both reflect the true risk profile of the insurer. The CEA suggested that the MCR should be calculated as a percentage of the SCR.

The press release follows calls by the CEA on 31 January for extra scrutiny of Solvency II to ensure, amongst other things, consistency in the calculation of SCR and MCR (see previous blog post here).

The CEA press release can be viewed by clicking here.