The Slovenia Times

All Slovenian insurers solvent under new EU rules

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The sector exceeds the demanded solvency capital by 61%, which is why the agency announced stricter supervision of some sales practices in the sector.

After years of preparations and long delay, the Solvency II directive took effect in Slovenia on 1 January, introducing uniform rules of supervision for all insurers in the EU and stricter capital demands.

Solvency II requires of insurers to factor in all risks in calculating their capital requirements, which includes market, credit and operating risks.

This means that capital requirements will hinge in particular on the distinct risk profiles of individual insurance companies.

Those that manage risks well will be rewarded with lower capital requirements, others with high exposure to risk will need bigger capital buffers.

The new rules also introduce the economic principle of valuation of assets and liabilities of insurers.

Capital is defined as the access of funds after all liabilities are covered.

If an insurer fails to meet the minimum demanded total solvency capital limit, the Insurance Supervision Agency can order financial and organisational measures to raise the capital.

If, however, it fails to meet the minimum demanded capital limit, the agency launches proceedings for liquidation.

The demanded minimum capital for the entire Slovenian insurance sector is EUR 225m and the demanded solvency capital EUR 913m.

On 1 January, the capital of the Slovenian insurers reached EUR 1.471bn, which is 161% of the demanded solvency capital.

All insurers meet the capital solvency criteria, exceeding them by 20% to almost 600%.

The head of the Insurance Supervision Agency, Sergej Simoniti, said this showed the insurance market was in good shape, noting that no insurer had needed state aid in the last 25 years.

But the agency's deputy head Mojca Piškurić pointed out that insurers were only just beginning to adjust to the new rules and that their capital adequacy could oscillate, depending on the economic situation.

The agency detected fewer risks with insurance products and insurance policies than with sales practices, which reportedly include selling of products to consumers that do not need them, cannot afford them or have not been properly acquainted with them.

This is why the agency announced more supervision in the area and efforts to raise people's awareness of such practices.

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