Just when insurance companies were feeling better equipped to solve the puzzle of requirements presented in the Sarbanes-Oxley Act (SOX), the United Kingdom and the 24 other member states in the European Union (EU) are now commenting on the EU Commission's proposed regulations on solvency that could be finalized as early as 2008. Called the Solvency II proposal, the regulations are not unlike the Sarbanes-Oxley Act, and could add more layers of regulatory reporting for insurers.American carriers and reinsurers need to get up to speed on Solvency II, say analysts, because down the road, the regulations could impact U.S. accounting and insurance standards.
Will U.S. regulators, now providing some input into the process, look at the EU's solution to preventing insolvencies with an eye to copying some of it in the states? Will the federal government see it as a prototype for some oversight of the industry in future years? No one knows, but a general knowledge of Solvency II is needed to avoid the surprise factor in any scenario.
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