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After 13 years, 3,200 pages and hundreds of millions of dollars in set-up costs, a new era has dawned in insurance. The Solvency II capital regime, an EU reform finally came into force on January 1 2016. One expected
consequence is a surge of mergers and acquisition activity as Solvency II rewards well diversified insurers with lower capital requirements forcing the sector to consolidate.
The other expected consequence is a surge of mergers and acquisition activity. Solvency II rewards well diversified insurers with lower capital requirements. So the sector is expected to consolidate as larger insurers look to diversify further and smaller insurers with specialised businesses (and less capacity to handle all the new analysis and reporting that Solvency II requires) seek to combine. The pan-European nature of the rules, which means that all of the EU’s insurers should be reporting their solvency position on the same basis, should help the process.
