Regulation & Governance
After a number of years of uncertainty, the new regulatory regime for insurance firms in Europe, Solvency 2, came into force on 1 January 2016. The Club’s underwriting vehicle, UK Europe, sits under this solvency regime as an entity based in the UK.
The Club’s extensive preparation has facilitated a smooth transition to the new regime. Part of this preparation has been to secure approval from the regulator for the treatment of a number of elements of the capital calculation.
The most complex regulatory approval related to the Club’s internal model. This sophisticated model is employed within the business to facilitate financial and capital management and help the Board determine the impact of key strategic decisions.
The Board was delighted to hear that the Club was one of a select number of firms to receive approval to use an internal model to determine regulatory capital requirements. The model is specifically tailored to the UK Club, and therefore provides a more accurate and comprehensive view of the Club’s risks, which in turn enables the Club to hold less capital than if the more general standard factors were to be applied.