A mixed bag
The European insurance market is a mixed bag. The numbers tell a story. As of 2009, Liechtenstein employed as few as 507 workers in the insurance industry, while at the other end of the scale, Germany employed about 216,500. The difference is also reflected in the number of supervised undertakings subject to Solvency II – between 10 and 625, according to the QIS5 report, with the number of supervisory staff working on Solvency II ranging between 25 to over 3,300.
Member states also began their Solvency II journey from different starting points. Some have already got a form of risk-based regulations in place while others are only beginning to grapple with the concept and its technical and staffing implications.
Its like a marathon. Some start at the front, others at the back – all with different levels of fitness and ability. All moving towards the same goal – at different speeds. Like runners, national regulators disperse along the course, they will all make it in the end (we hope) but for now there are leaders and laggers.
Leader and laggers
Looking at the level of preparation of regulators across Europe you can see a broad north-south divide. The former, which include the likes of France, Germany, the UK and the Nordic countries have surged ahead while their southern counterparts are lagging behind, with many eastern European regulators barely out of the starting blocks.

Where you are depends on where you started
The location of each national regulator on the path to implementation today depend to a large extent on the history and the nature of the country’s insurance market: factors that could also affect the regulator’s attitude and approach to Solvency II. Denmark, for example, began moving towards a market- and risk-based regulatory system over a decade ago when its direct life and pension market (regulated according to the same rules) came under severe pressure with the dot com bubble collapse at the turn of the century.
Uneven implementation of Solvency II – not an option


Implications of failed harmonization
But what if, despite all the best efforts, the regulation is applied unevenly in practice? Many in the industry believe this is a likely scenario, which raises questions both for insurance firms and for Solvency II as a market harmonising regulation. Uneven application of Solvency II could result in higher costs to firms in countries where regulators demand more rigour in reporting.
Internal model and rating agencies
