Results of the Fifth Impact Study (QIS5) on Solvency II for insurers

Press release
Date 14 March 2011

In the second half of 2010, the fifth quantitative impact study on Solvency II was held to prepare for its implementation. The purpose was to gain insight into the financial impact of Solvency II for insurers and to test feasibility of the Solvency II modules. Together with the publication of the results by EIOPA, the European Insurance and Occupational Pensions Authority, De Nederlandsche Bank (DNB) provides further information on the results for the Dutch insurance market.

  • Dutch insurers pass test well; capital surplus comes down but remains at a comfortable level. Reassuring number of insurers in the Netherlands meet the new capital requirement under Solvency II.
  • Dutch results are in line with the European outcome, both with respect to financial impact and feasibility. The sector participated in large numbers in QIS5, thus taking an important step in the preparation for Solvency II.
  • The limited time remaining until the introduction of Solvency II will be used to smooth the implementation of some parts of the framework

Impact study: Dutch insurers also pass the test well

Under Solvency II, risks run by insurers are viewed in context and quantified. In addition, the balance sheet is marked to market. The capital surplus for the Netherlands in QIS5 stands at EUR 17.5 billion. This is the difference between the available capital of EUR 47.5 billion and the capital requirement for Dutch insurers totalling EUR 30 billion (amounts are rounded off). The capital surplus is approximately EUR 7.5 billion lower than under the present regime. The European market shows a similar development of the surplus. Under Solvency II, the Solvency Capital Requirement or SCR increases from EUR 15 billion to EUR 30 billion. At the same time, the available capital increases from EUR 39.5 billion to EUR 47.5 billion, largely as a result of a shift from prudence in technical provisions to available capital.

A limited number of Dutch insurers would not directly meet the new capital requirement and consequently would have to attract more capital or adjust their risk profile. For these insurers, a total of EUR 0.9 billion of the capital requirement is not covered yet. On the whole, the Minimum Capital Requirement or MCR does not lead to problems for Dutch insurers.

The Dutch insurance market therefore passes the test well. DNB observes that QIS5 is the last comprehensive test before introduction of the Solvency II framework. The reports from Dutch solo entities present a picture of the financial impact of Solvency II based on the figures at the end of 2009.
203 out of the 246 Dutch insurers covered by Solvency II participated in QIS5. The Dutch level of participation of 83% exceeds both that of QIS4 (51%) and European participation in QIS5 (68%). In addition, 19 Dutch insurance groups submitted a group report. Insurers have thus made a great effort and taken a major step in their preparation for Solvency II.  

Feasibility of the Solvency II framework

The second aim of the QIS5 impact study was to test feasibility of specific parts of the framework and to calibrate parameters. The calculation and specification of the components of own funds and of technical provisions still requires further investigation, in particular the treatment of deferred taxes and expected earnings. DNB largely shares the recommendations made by EIOPA in these areas. Solvency II is on the right track; the test has identified elements for further improvement. For the Dutch insurance market, it is also important that the capital requirement for health insurers  remains well aligned with the Dutch market and developments in the risk netting arrangement, and that there will be an adequate transitional arrangement for subsidiaries of Dutch insurers in countries outside the European Economic Area (equivalence principle for other countries). 

A comprehensive overview of the QIS5 results for the Dutch insurance market can be found at Open Book on Supervision. The full EIOPA QIS5 report can be downloaded from:  

End of Press release  

For further information, please contact Tobias Oudejans (tel. +31 20 524 3100 or +31 6 524 96 961), Herman Lutke Schipholt (tel. +31 20 524 2712 or +31 6 524 96 900) or Kees Verhagen (tel.nrs. 020-524 2272, en 06-211 23 922).