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Dave Spart

Lloyd’S To Lobby For Lower Solvency Ii Catastrophe Reserve

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http://www.artemis.bm/blog/2011/01/18/lloyds-to-lobby-for-lower-solvency-ii-catastrophe-reserve/

Not directly house-price related but it is further proof (if proof were needed) that large financial organisations don't want to play ball with new regulations designed to avert catastrophe.

Is greed jeopardising the financial system once more? :angry:

Well, the entire insurance industry across Europe is being forced to comply with Solvency II, failure to do so can mean all manner of sanctions. Having recently finished a contract with a very large though little known life insurer in the south Birmingham region (no names) I can tell you that I have heard rumours they alone may need to raise between 3bn to 8bn pounds in the capital markets in order to comply - coming at a time when the banks' capacity to lend has been severely hampered.

Solvency II consultants are being paid absolute fortunes (daily rates of 4,000 pounds per day) to address how such companies can reduce their new additional capital-requirements and avert sanction.

Edited by Dave Spart

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Apart from AIG, which thought it was a bank, there have been few defaults by insurers since the catastrophes of the early 90s when Lloyds nearly collapsed as an institution.

Increasing the capital that insurers have to put aside for extreme events may mean a smaller chance of default, but it also limits the amount of insurance that an insurer can write. It has been widely commented upon just how much insurance has increased in price. Now if insurers will not be able to write so much, it will increase demand for the insurance that they can write, leading to rising prices. Also, the firms will look to make a similar amount of money off a smaller book of business, again pushing up costs for consumers.

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Apart from AIG, which thought it was a bank, there have been few defaults by insurers since the catastrophes of the early 90s when Lloyds nearly collapsed as an institution.

Increasing the capital that insurers have to put aside for extreme events may mean a smaller chance of default, but it also limits the amount of insurance that an insurer can write. It has been widely commented upon just how much insurance has increased in price. Now if insurers will not be able to write so much, it will increase demand for the insurance that they can write, leading to rising prices. Also, the firms will look to make a similar amount of money off a smaller book of business, again pushing up costs for consumers.

Lloyds was practically a carbon copy of this crisis on a smaller scale, for retrocession read bundled mortgages, underwriters took commission on the premium and gave not a fck about the actual risk, one of the main reasons insurers didnt have all these mortgages on their books were the early 90s. Because of the 90s problems and insurer memory banks were unable to dupe their poorer cousins this time

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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