Insurance companies could face EC overhauls

Thu, 12 Jul 2007

According to recent reports that could shake up the health insurance and life insurance industries, the European Commission could choose to radically overhaul the way in which insurance companies cover risk.

The news comes in response to the Equitable Life furore, when over one million policyholders faced severe damage to their savings . The measure still requires approval for the European Parliament and countries in the EU. The new system is known as the Solvency II regime.

Insurers would need to have sufficient capital to cover major events such as storms, accidents and floods. The Internal Market Commissioner for the EU, Charlie McCreevy, reportedly commented: "Consumers, the industry and the EU economy and financial stability will all benefit. Our aim is to have this new system functional by the end of 2012. Risk-based solvency requirements, together with the establishment of early-warning mechanisms and strengthened governance requirements, should help to avoid unfortunate incidents like Equitable Life."
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