Analysis of present and future of the insurance industry in Spain

The IMF delegation met with representatives of the Spanish Institute of Actuaries

The IMF team, which is in Madrid to evaluate the insurance market, met last week with members of the board of the Spanish Institute of Actuaries (IAE). During the meeting, the president of IAE, Luis Maria Saez de Jauregui, the IMF released a report that included the highlights pertaining to the insurance industry.

Thus, among the agenda items were: market behavior, Solvency II, the actuarial profession and training. At the meeting, which took place at the headquarters of the IAE, also attended by Saez de Jauregui, the members Henry Karsten and Ramon Nadal, Secretary General of the IAE, Hugo Gonzalez, and former President of IAE, Manuel Peraita.


“The SER believes that all matters relating to defense and consumer protection must be further developed,” said Saez de Jauregui. On the role of Solvency II, also noted that, overall, the sector will be sufficiently prepared to meet the challenges of the standard. Also, the IMF said that Solvency II “will be a challenge for the Spanish insurance industry, and that the new capital requirements will be much higher than it originally had in mind, both in the internal models and standard models “.

He added that “it is possible that internal models require more capital than standard models, which should reflect whether the calibration of the standard models will actually represent 99.5% of the solvency rules require.” Saez Jauregui emphasized that “Solvency II will be an opportunity to develop more deeply the actuarial profession in insurance companies and to participate actively in the way that insurers take strategic decisions.”

In relation to the actuarial profession, the IAE appreciates the support and importance of the IMF granted, all within the context of being the actuarial profession a profession regulated by law, the clerk must give his opinion on his own responsibility, requiriéndosele that this is a reliable opinion, aspect included in the insurance policy and pension plans. Therefore, the Institute said that the IMF considered appropriate educational level for access to the profession. Also believes that continuing professional development of the actuary is a necessity, and therefore advocates that the role of the actuary in the industry insurance is the same throughout Europe.

COLLABORATE TO PROVIDE TRANSPARENCY AND PROVIDE REALISTIC PROJECTIONS

In relation to the Social Security System, IAE expressed the need to push the second pillar (occupational) and third pillar (voluntary) to complement the first pillar (mandatory funding and delivery system). Thus, the vision of the school goes through the public authorities and insurance companies and pension funds, need to participate more actively in this development, providing solutions and products for the market. The IAE said it is necessary to seek greater transparency to defined contribution schemes and promote different ways to fund defined benefit systems, regardless of their instrument.

So nuanced that the actuary must work together to provide transparency to these complex products (whether formalized in a contract of insurance or a pension plan), and in order to make realistic projections of the overall benefits of employees and workers, including in projecting both the first pillar, second and third pillar at the same time.

Finally, we discussed other issues such as longevity risk, risks inherent in the business of cash flow matching, the standardized tests ‘stress tests’, the situation of the future ‘Matching Premium’, the reasons that existed behind recent bankruptcies of insurance companies, and the real effectiveness of risk control systems.

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