Insurers lock horns with policymakers on undertaking-specific parameters

Small and specialist insurers are seeking ways to tailor Solvency II’s standard formula, but policy-makers remain cautious. Blake Evans-Pritchard reports

While internal model development has been the focus for larger insurers, most European insurers are planning to use Solvency II’s standard formula for calculating their capital requirements. Some specialist insurers are looking to take advantage of rules  that enable them to tailor the standard formula to reflect their risk profile.

The problem is that regulators have now tightened up the rules surrounding so-called undertaking-specific parameters (USPs) to such an extent that some within the