The European Commission is in the process of redefining insurance solvency regulations. The latest draft of this new framework shows a friendly approach to the use of capital market tools. For insurance players, who increasingly look toward securitization as a source of funding, it means better-defined reporting requirements. Moreover, the changes are likely to support the continued growth of insurance ABS.
The new system would introduce more sophisticated solvency requirements for insurers, in order to guarantee that they have sufficient capital to withstand adverse events, such as floods, storms or big car accidents. This will help to increase their financial soundness.