At the end of March, the German Federal Financial Supervisory Authority (BaFin) published the results of the Fifth Quantitive Impact Study (QIS5) for the German insurance market. The QIS5 study was initiated by the European Commission in order to test the impact of Solvency II at European level. Over 250 insurance companies and other undertakings in Germany participated in the exercise on a voluntary basis.

Two key results from the report in brief:

1. QUIS5 presented a major challenge for all participating undertakings. One issue was the complexity of the QUIS5 standard formula specification. The same applies to requirements concerning data management and the required level of detail.
2. Around ten percent of German companies participating in the exercise would have failed to fulfil the set parameters.

The results of QIS5 show that a lot of preparation is still needed with respect to Solvency II.

Arndt Gossmann, Spokesman for the DARAG Executive Board says: “Under Solvency II, capital provision will also be required for actuarial reserves of already discontinued business. Transferring Run-off reserves releases tied-up capital.”