FSA slams insurance firms' 'inadequate' work on Solvency II

The letter stated that insurance firms are not doing enough work to ensure that their business modelling is sufficiently detailed to reflect their risk profile. Most insurance companies are using an 'internal model approach' to ensure they satisfy Solvency II requirements. Solvency II is a set of regulatory criteria that aim to establish new European Union-wide capital adequacy requirements and risk management standards for the insurance industry. 'Validation', which is fundamental to the 'internal model approach', requires that insurers have established rigourous processes that ca...