Annual Report 10/11 1

Transcription

1 Annual Report 10/11 1

2 Annual Report 10/11 2

3 table of contents 4 Foreword 6 Goals and Tasks Mission Statement Helmut Gründl: First Steps and Outlook 8 Opening Ceremony of the ICIR 10 Facts and Figures Sponsors People at the ICIR Location 12 Research at the ICIR Research Focus Current Research Projects and Working Papers Guests at the ICIR Publications during the Reporting Period Conference Participation 16 Platform Services Events Organized by the ICIR Dialogue Event: Solvency II A Blueprint for Worldwide Solvency Regulation? Speech of Lord Levene: What Risks will CEO s of the Future Face? Conference on Transatlantic Insurance Group Supervision ICIR Participation in Practice-oriented Conferences and Talks Project on Measuring Consumer Utility of Financial Advice, initiated by the German Federal Ministry of Food, Agriculture and Consumer Protection Helmut Gründl appointed member of EIOPA s Insurance and Reinsurance Stakeholder Group 21 Lectures and Executive Training 22 The ICIR in the Media 3

4 Foreword Prof. Dr. Wolfram Wrabetz After the euphoria of deregulation of the 1980s and the 1990s, the financial and economic crisis has shown that the financial services industry, of which the insurance industry is an important part, cannot be organised responsibly without clear regulatory rules. Public opinion and the politics acting on its behalf are increasingly aware of this issue. As a consequence, the European Union attempts to ensure optimal competition in the insurance industry, but also prevent whenever possible the collapse of individual companies or the whole industry by a system of solvency rules. The European Commission initially mandated the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) to elaborate on these rules. Frankfurt/Main was chosen as the residence for this new organisation. At the end of 2009, this institution, consisting of the national insurance supervisors of the 27 EU member states, had finished its work and presented a set of regulations which gained international importance under the name Solvency II. This new and EU-harmonized set of insurance regulations was passed by the European Parliament and approved by the EU commission and the EU Council of Ministers at the end of It was supposed to become legally binding for all insurance companies operating in the EU at the beginning of At the same time, the European Institutions have agreed on the conversion of CEIOPS into a European insurance supervisory authority, now called the European Insurance and Occupational Pensions Authority (EIOPA), which continues to operate in Frankfurt. Frankfurt is now the seat of three important institutions for financial regulation in Europe: EIOPA, the European Central Bank and the European Systemic Risk Board. The government of the State of Hesse and the City of Frankfurt have made considerable and successful efforts to keep the European Insurance Supervision in Frankfurt/Main. Nevertheless, it was clear to all involved parties that this project required support and a unique foundation from the scientific sphere. Therefore, already at an early stage, the State Government of Hesse partnered with the German Insurance Association (GDV) to develop a plan to create a chair at Goethe University in Frankfurt. Affiliated to the chair, an Institute for European Insurance Supervision, which is unique in Europe and throughout the world, was supposed to support Frankfurt s endeavour to become the seat of EIOPA. Therefore, all involved parties were pleased that by the winter semester 2010/2011 Prof. Dr. Helmut Gründl, an internationally recognised expert in insurance science, could be appointed as professor of insurance and regulation and as head of the newly founded International Center for Insurance Regulation (ICIR). Thus, Frankfurt reinforced its claim for becoming the European supervisory-headquarters in the financial sector. 4

5 foreword Insurance regulation and supervision as an area of science is a relatively new approach and offers huge potential for research, teaching and practical application. This area of science can and should be used as a model for designing supervisory systems throughout the world, and therefore has both an international and interdisciplinary focus. In the Goethe-University s House of Finance, a collaboration of economics, law and mathematics is now more of a possibility than anywhere else in the scientific world. During the first year of its existence, the International Center of Insurance Regulation started its teaching and research activities with considerable success and gained credibility both within and outside of academia. Despite the institution s achievements, its goals for research output and teaching efforts that were set for and by the institute are ambitious. The government of the State of Hesse and the German Insurance Association will not only keep on supporting the work of the institute financially, but will also continue to follow its development with professional interest. I wish this new university institute the best of luck and every success in its future work. Prof. Dr. Wolfram Wrabetz Beauftragter der Hessischen Landesregierung für den Versicherungsbereich (Representative for Insurance of the Government of the State of Hesse) 5

6 Goals and Tasks Helmut Gründl First Steps and Outlook We can now look back on the International Center for Insurance Regulation s first year. It was marked by our activities in setting up this new institution and by first successes attained. This annual report gives an impression of our goals, the work that has been done, and the tasks that still lie ahead. As a scientific institute of Frankfurt s renowned Goethe University and its House of Finance, the most important goal of the ICIR is to produce internationally visible research in the field of insurance regulation and supervision. Thus, one article of mine that appeared recently in the Geneva Papers deals with the issue of mortality risk and its influence on life insurers solvency situation. Another Geneva Papers publication investigates the disclosure practices in the European insurance industry and their implications for the performance of insurance companies. The ICIR also issues a working paper series that is jointly edited by Prof. Manfred Wandt and myself. During its first year this working paper series already counted seven contributions, and we intend to continue it as a platform for interdisciplinary research on insurance regulation topics. Besides research, the exchange of ideas with regulatory authorities and the insurance industry is the second focus of the ICIR. During the last year I had manifold conversations with EIOPA and the German BaFin about opportunities for cooperation. My appointment as a member of EIOPA s Insurance and Reinsurance Stakeholder Group and Prof. Karel van Hulle s membership on the ICIR s Executive Board enable the ICIR to be close to the heartbeat of European policy makers and to contribute our own ideas, e.g. on Europe s Solvency II project. The most important event at the ICIR during the past year was our Conference on Transatlantic Insurance Group Supervision in September 2011, which was organized by the ICIR in collaboration with EIOPA and the U.S. National Association of Insurance Commissioners (NAIC). The objective of the conference was to foster the transatlantic dialogue between supervisors and leading professionals of the insurance industry on the subject of Transatlantic Insurance Group Supervision. Through an in-depth discussion of the major issues in break-out sessions we tried to arrive at operational solutions. More than 60 distinguished participants from U.S. and European supervisory authorities and the insurance industry attended this conference. According to the participants assessment the conference was a great success, and it certainly contributed to the ICIR s international visibility and reputation. 6

7 goals and tasks Mission Statement World-Leading ResEarch on Insurance Regulation in Frankfurt International and Interdisciplinary Platform High-level executive education Recognized as the leading scientific institution in the area of insurance regulation, the ICIR fosters high-quality international, independent research on insurance regulation and market solutions to regulatory questions. The ICIR provides an international and interdisciplinary platform for scientists, the insurance industry, regulatory authorities, and policymakers to exchange ideas and seek answers to regulatory issues. In order to increase professional knowledge in the field of insurance regulation, the ICIR offers high-level executive education courses on insurance regulation topics. The activities and the development of the ICIR were attentively observed and accompanied by the national and international press. A variety of press articles gives evidence of the interest the public has in the regulatory topics covered by the ICIR. The third goal of the ICIR is education. Within Goethe University s business and economics master programs, I offer courses in Risk Management and Insurance and Asset and Liability Management of Insurance Companies. In addition to these university courses, the ICIR was asked by the Deutsche Versicherungsakademie (DVA) and the Gesamtverband der Deutschen Versicherungswirtschaft (GDV) to jointly develop an executive education program for the insurance industry, which already started in This program intends to train insurance managers for the future requirements of Solvency II. What are the next steps of the ICIR in its second year? Of course, high-calibre scientific output remains the main goal, and I am confident that we will see a couple of interesting publications. We will also intensify our cooperation with researchers from outside our university; in November and December 2011 we will have two prominent visiting professors at the ICIR. Another important goal for the second year is to hire an assistant professor ( Juniorprofessor ) for risk management and insurance and an assistant professor or post-doc in the law area. They will contribute to the scientific output and the visibility of the ICIR. Furthermore, we want to foster the interdisciplinary cooperation within the ICIR. Insurance regulation is a topic that naturally relates to law, economics, and actuarial science. We would therefore like to hire assistant professors with an interdisciplinary background; we intend to set up interdisciplinary events and also interdisciplinary research projects. All these plans require substantial financing efforts. Despite the generous sponsoring of the ICIR by the GDV and the State of Hesse, it will be necessary to acquire additional financial resources for further development. None of the positive developments of the ICIR would have been possible without the work of its team members. In the ICIR, I am supported by a team assistant, research assistants, and student assistants who are deeply committed to the buildup of the ICIR, for which I am most grateful. I also thank the ICIR s Executive Board that has given me invaluable advice in the course of the last year. And, of course, I thank the sponsors of the ICIR, the GDV and the State of Hesse, for their generous financial sponsoring and, in addition, for their benevolent support. Prof. Dr. Helmut Gründl Managing Director of the ICIR 7

8 Opening Ceremony Weltweite Premiere: Die Goethe-Uni gründet ein Zentrum für Versicherungsregulierung. Frankfurter Rundschau, (World Premiere: Goethe University Founds a Center for Insurance Regulation) On November 24, 2010, the formal inauguration of the Chair Insurance and Regulation and the opening ceremony of the International Center for Insurance Regulation (ICIR) took place at the House of Finance. An additional reason to celebrate was the 60 th birthday of Prof. Dr. Wolfram Wrabetz, associate lecturer at the House of Finance, CEO of Helvetia Germany, Representative for Insurance of the Government of the State of Hesse, and Executive Board member of the ICIR. Prof. Dr. Manfred Wandt held the congratulatory speech. Prof. Dr. Helmut Gründl cordially welcomed guests from academia, regulatory authorities and the insurance industry. Among the guests were the President and the Vice-President of Goethe University, Prof. Dr. Werner Müller-Esterl and Prof. Dr. Rainer Klump. Helmut Gründl also welcomed high-ranking representatives of the ICIR s sponsors, such as the former finance minister of Hesse, Karlheinz Weimar, and other representatives of the State of Hesse. The German Insurance Association (GDV) was represented by its President, Rolf-Peter Hoenen, and Dr. Jörg Freiherr Frank von Fürstenwerth, managing director and presidium member of the GDV. In his speech, Helmut Gründl emphasized the importance of having the first scientific institution worldwide focused on the regulation of insurance companies, and addressed the tasks and challenges which lie ahead. In the course of the opening ceremony, Prof. Dr. Karel van Hulle gave a speech on the current development of the European regulatory architecture. 8

9 opening ceremony 9

10 Facts and Figures Sponsors The ICIR is generously sponsored by the German Insurance Association (GDV) and the State of Hesse. Each of the sponsors provides per year for a planned funding period of 10 years. The financial support of the Frankfurt Association for the Promotion of the Insurance Sciences (Förderkreis für die Versicherungslehre an der Johann Wolfgang Goethe-Universität Frankfurt am Main e.v.) is very much appreciated. People at the ICIR The executive board of the ICIR presently consists of Prof. Dr. Helmut Gründl (Managing Director), Prof. Dr. Karel van Hulle, Prof. Dr. Manfred Wandt and Prof. Dr. Wolfram Wrabetz. Prof. Dr. Helmut Gründl s team at the ICIR currently comprises an administrative assistant: Petra Petersen; four research assistants: Ming Dong, Franca Elsner, Sebastian Schlütter, Rayna Stoyanova; and two student assistants: Mathias Iwanowsky and Thuy Linh Nguyen. Prof. Dr. Helmut Gründl Prof. Dr. Karel van Hulle Prof. Dr. Manfred Wandt Prof. Dr. Wolfram Wrabetz Petra Petersen Ming Dong Franca Elsner Sebastian Schlütter Rayna Stoyanova Mathias Iwanowsky Thuy Linh Nguyen 10

11 Facts and Figures Location The ICIR is located in the House of Finance on the Campus Westend of Goethe University Frankfurt. No better choice of location is imaginable, because Frankfurt has become the European center for the regulation and supervision of financial markets. Being a seat of the European Central Bank, the European Systemic Risk Board and the headquarters of the new European insurance regulatory authority EIOPA the location generates manifold possibilities for co-operation. Goethe University, in addition, provides a unique interdisciplinary scientific environment in the House of Finance. As one of the major institutions of higher education, Goethe University is committed to providing a wide spectrum of disciplines in research and teaching, to generating outstanding scientific achievements, and to breaking new ground through interdisciplinary work. In its short but very successful history, it has been awarded 19 Nobel laureates. The House of Finance encompasses more than 200 researchers, among them 32 professors, conducting innovative and independent research in the field of finance and financial services. In addition, about 200 PhD students and 190 Master students from all over the world are doing research in the fields of finance, banking and insurance. Furthermore, it has been recognized as having leading professors in these fields, according to Handelsblatt-Ranking 2010, and has been accredited by the Association to Advance Collegiate Schools of Business (AACSB) only three years after its establishment in May

12 Research at the ICIR Research Focus The research interests of the ICIR focus on risk management and insurance regulation. Specific research questions are, for example: Rules-based versus principles-based regulation Regulatory policy under multiple objectives Guaranty funds and moral hazard problems Group supervision: optimal capital transfer mechanisms Current Research Projects and Working Papers Projects on which ICIR members are presently working: Anja Zimmer, Helmut Gründl and Christian Schade Price-Default Risk-Demand-Curves and the Optimal Corporate Risk Strategy of Insurers: A Behavioral Approach This contribution studies the effects on an insurer s optimal solvency level when consumers have full information about the insurer s default risk. Using experimentally obtained data on consumer reactions to insurance with default risk, the authors show in a theoretical model that the insurer should choose to be default-free rather than having even a very small default probability. This risk strategy is also optimal when assuming substantial transaction costs for risk management activities to obtain the maximum solvency level. The results suggest that forcing transparency as to the insurer s solvency level would be an effective regulatory instrument for protecting policyholder interests. Dirk Höring and Helmut Gründl Risk Management s Place in an Organization Tradeoff between Independence and Coordination This paper investigates the question of how risk management should be embedded in a firm s hierarchy. The authors take an innovative approach by combining the well-known capital asset pricing framework with game theoretic thinking. They develop the conditions under which risk management adds value to an investment decision. Furthermore, they provide a theory for the integration of risk management into an organization based on private information and differences in preferences. The results show that even if the principal s and the business manager s interests are not perfectly aligned, it may be beneficial for the organization to endow the business manager with additional private information on a project s risk characteristics to foster co-ordination. On this basis the authors develop implications for the organization of risk management. Sebastian Schlütter Capital Requirements or Pricing Constraints? an Economic Analysis of Measures for Insurance Regulation This project compares risk-based capital requirements and pricing constraints as instruments for insurer solvency regulation. Whereas modern regulatory regimes, such as the future standard Solvency II in the EU, allow for liberalized pricing and control insurer default risk by means of capital requirements, insurance regulation in developing economies is usually characterized by the prior approval of policy conditions and insurance premiums. The results show that capital requirements are the more efficient regulatory instrument and lead to lower insurance prices as long as regulatory agencies are proficient in measuring insurers actual default risk levels. The paper also derives threshold values for regulators investments into risk-based capital regulation. 12

13 research Sebastian Schlütter and Helmut Gründl Risk Management and Group Building in Disciplined Insurance Markets An important development in today s insurance industry is the constant trend towards group building and consolidation. In this paper, the authors analyze how insurers optimally adjust their risk management after group building, particularly with regard to loss transfer contracts between the subsidiaries. The model incorporates the impact of consumer decision making on corporate risk management and accounts for the transaction costs of risk management. They find that insurance demand functions have a strong influence on optimal risk management as well as on group-building benefits for shareholders, managers, and policyholders. Sebastian Schlütter The Influence of Taxation and Subsidization on Insurers Safety Level and Pricing Decisions This project analyzes in which way insurers optimally respond to taxation and subsidization schemes. It turns out that in markets which are not perfectly competitive, different schemes can lead to considerable differences in insurance prices and safety levels, even though the schemes are identical with regard to the overall tax income or subsidization volume. The model provides criteria to identify which incentives result from taxation and subsidization and thereby facilitates the creation of schemes which are compatible with overall policy objectives. Rayna Stoyanova, Helmut Gründl and Sebastian Schlütter Safety versus Affordability as Targets of Insurance Regulation: A Welfare Approach The authors study the effectiveness of the regulatory tools price ceilings and equity capital restrictions, in achieving the regulatory targets affordability and safety. They develop a theoretical model that considers policyholder and shareholder interests in a micro-economic context. Applying the model, they analyze the combined effect of price and solvency regulation on insurers and consumers benefits. Utilizing an insurance demand function, the optimal regulatory mix for achieving maximal consumer surplus and total welfare is determined. The results suggest that a suitable combination of different moderate regulatory restrictions serves as an effective mechanism for increasing social welfare. Sebastian Schlütter, Katja Hanewald and Helmut Gründl Regulating Life Insurers: Capital Requirements vs. Constraints on Guaranteed Interest Rates In many countries, life insurers face restrictions regarding the minimum interest rate that they are allowed to offer on new life insurance policies. Such regulations aim at ensuring that the insurers can fulfill their contractual obligations in the long run. The authors analyze the interactions between regulatory constraints on guaranteed interest rates and risk-based capital requirements. They show that in the presence of capital requirements, guaranteed interest rate restrictions potentially reduce customers benefits from life insurance but do not necessarily enhance insurers safety levels. The authors identify cases in which capital regulation induces insurers to considerably reduce interest rate guarantees in new contracts. Ming Dong, Helmut Gründl, Sebastian Schlütter Insurers Risk-Shifting Behavior under Different Guarantee Schemes Insurance guarantee schemes are perceived as a way of protecting policyholders interests and mitigating insurers risk-shifting behavior. The question as to which mechanism is welfare optimal has not yet been systematically studied. To this end, our paper compares three common guarantee schemes: a flat-rate premium, a riskbased premium, and an ex-post loss-based premium scheme. As guarantee funds affect the distribution of the pay-offs to shareholders and policyholders, they have the power to mitigate the risk shifting problem: we can end up in a situation in which the insurer will optimally invest a high fraction of its assets risk-free. We also show that different guarantee schemes will lead to different insurance premiums reflecting the respective safety level. For the full articles, if available, see the ICIR s Working Paper Series on our website: 13

14 research Guests at the ICIR The ICIR cooperates with researchers from Europe and beyond. So far, the ICIR has welcomed four distinguished academic guests: Prof. Mike B. Adams, Ph.D. The School of Management University of Bath, United Kingdom visited the ICIR from March 28 to April 1, 2011 and presented his recent project Does Managerial Entrenchment Motivate the Insurance Decision? Prof. Mark Browne, Ph.D. The School of Business University of Wisconsin-Madison, United States During his stay at the ICIR from May 9 to May 12, 2011, Prof. Browne gave a presentation in the Brown Bag Seminar with the title: One-Sided Commitment in Dynamic Insurance Contracts: Evidence from Private Health Insurance in Germany. Prof. Dr. sc. Marijana Curak Head of Department of Finance Faculty of Economics, University of Split, Croatia Prof. Curak s stay is financed by a DAAD scholarship. She will visit the ICIR from October to December Prof. Gregory Nini, Ph.D. The Wharton School University of Pennsylvania, United States Prof. Nini s stay is financed by the Metzler Foundation. He will visit the ICIR from November 2011 to January Publications during the Reporting Period Zhou-Richter, Tian; Browne, Mark; Gründl, Helmut: Don t They Care? Or, Are They Just Unaware? Risk Perception and the Demand for Long-Term Care Insurance, in: The Journal of Risk and Insurance, Vol. 77, No. 4, 2010, Hanewald, Katja; Post, Thomas; Gründl, Helmut: Stochastic mortality, macroeconomic risks, and life insurer solvency, in: The Geneva Papers on Risk and Insurance, Vol. 36, 2011, Höring, Dirk; Gründl, Helmut: Investigating Risk Disclosure Practices in the European Insurance Industry, in: The Geneva Papers on Risk and Insurance, Vol. 36, 2011, items on value-based management in insurance companies in: Gabler Versicherungslexikon, ed. by Fred Wagner, Wiesbaden (Gabler Verlag)

15 research Conference Participation November 18, 2010 WU Competence Day, Vienna, Austria Presentation: Risk Management and Group Building in Disciplined Insurance Markets Speaker: Sebastian Schlütter Organized by the Department of Finance, Accounting and Statistics of Vienna University of Economics and Business (WU), the WU Competence Day 2010 provided a platform for researchers on the issues of reforming and regulating financial markets. December 03, 2010 Ph.D. Seminar, Nürnberg, Germany Presentation: Product vs. Corporate Regulation: A Welfare Approach Speaker: Rayna Stoyanova The Doctoral Seminar at Friedrich-Alexander- Universität Erlangen-Nürnberg was a good opportunity for junior researchers from different insurance institutes to present their research ideas and to receive valuable feedback. December 15, 2010 House of Finance, Frankfurt, Germany Presentation: Optimal Safety Levels and Prices for Stock Insurance Companies Speaker: Sebastian Schlütter The recurring Brown Bag Seminar of the House of Finance, Goethe University, is an ideal opportunity to present research projects and to gain thoughtprovoking comments and suggestions. March 16 17, 2011 Annual Congress of the German Insurance Science Association (DVfVW), Berlin, Germany In a plenary session, Prof. Dr. Helmut Gründl spoke on Sicherungssysteme für Finanzdienstleistungsunternehmen im europäischen Vergleich ( Guarantee Schemes in the European Financial Services Industry ). In addition, three working papers of the ICIR were presented: Höring, D. and Gründl, H.: Wem sollte der Risikomanager berichten? Ein Konflikt zwischen Unabhängigkeit und Zusammenarbeit Schlütter, S.: Capital Requirements or Pricing Constraints? An Economic Analysis of Measures for Insurance Regulation Stoyanova, R., Gründl, H. and Schlütter, S.: Safety versus Affordability as Targets of Insurance Regulation: A Welfare Approach. April 13 14, rd UK Insurance Economists Conference, Nottingham, UK Presentation: Safety versus Affordability as Targets of Insurance Regulation: A welfare Approach Speakers: Helmut Gründl and Rayna Stoyanova The 33rd UK Insurance Economists Conference was organized by the Centre for Risk & Insurance Studies (CRIS) of the University of Nottingham. June 15, th International Congress on Insurance: Mathematics and Economics (IME), Trieste, Italy Presentation: Capital Requirements or Pricing Constraints? An Economic Analysis of Measures for Insurance Regulation Speaker: Sebastian Schlütter The IME Congress is a forum for international researchers to focus on the latest advances, trends and developments in the area of actuarial science and insurance and financial modeling. The theory and methods of actuarial science and their applications in insurance, finance and risk management were at the core of the Congress. August 07 10, 2011 ARIA 2011 Annual Meeting, San Diego, USA The annual meeting of the American Risk and Insurance Association is the main event for researchers in the field of risk management and insurance. Three papers of the ICIR were accepted for presentation: Höring, D. und Gründl, H.: To Whom Should the Risk Manager Report Risk Management s Place in an Organization Schlütter, S.: Capital Requirements or Pricing Constraints? An Economic Analysis of Measures for Insurance Regulation Stoyanova, R., Gründl, H. and Schlütter, S.: Safety versus Affordability as Targets of Insurance Regulation: A Welfare Approach. 15

16 Platform Services Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Orga Dialogue Event Solvency II A Blueprint for Worldwide Solvency Regulation? On February 11, 2011, a dialogue event focusing on insurance solvency regulation was held in Munich, Germany among industrial experts, supervisors and insurance scientists. The event was organized by the German Association of Insurance Sciences (DVfVW) in cooperation with the Munich Risk and Insurance Center (MRIC) and the International Center for Insurance Regulation (ICIR). Three distinguished speakers, Therese M. Vaughan, Ph.D., Chief Executive Officer, National Association of Insurance Commissioners (NAIC), Boston, USA Joachim Oechslin, Chief Risk Officer, Munich Re, Munich, and Thomas C. Wilson, Chief Risk Officer, Allianz SE, Munich gave their opinions from different perspectives on the issue whether Solvency II can serve as a blueprint for worldwide solvency regulation. Ms. Vaughan s point of view was that the U.S. has its own benchmark for regulating insurance companies, the Risk Based Capital approach, and Solvency II is not a viable option for the U.S. regulation scheme; however, she also emphasized the great importance of Solvency II for Europe. About the new requirements for quantitative models of Solvency II, Mr. Joachim Oechslin expects that asset and liability management will become more complex under Solvency II. Therefore, he prefers a Solvency II solution which comprises both principles and rules. The third speaker Mr. Thomas C. Wilson high-lighted the implications of Solvency II on risk underwriting, risk controlling, risk strategy and risk communication. He said that Allianz SE is well-prepared to comply with the new Solvency II guidelines. We would like to thank the German Association of Insurance Science for the wonderful organization and Munich Re for providing the location. An article about this event was published in Versicherungswirtschaft, 65. Jahrgang, 1. März

17 Platform Services nized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the Speech of Lord Levene What Risks will CEO s of the Future Face? On February 28, 2011, the ICIR welcomed Lord Peter Levene, chairman of Lloyd s of London, at the House of Finance, to talk about what kind of risks future CEOs might have to face. What kind of risks might future CEOs have to face? Lord Levene replied to Prof. Gründl s introductory question with: Insurance is not about gambling with fate. Generally, managers should not have nightmares about possible future risks, especially because risks can also provide opportunities, and every CEO should be aware of this. Unknown risks, on the other hand, may constitute a grave danger. To provide the audience with an understanding of the unique operating structure of Lloyd s, Benno Reischel, Head of Lloyd s Northern Europe, gave a brief introduction of Lloyd s long history, which began in a coffee house in London in Today, Lloyd s is the leading specialist insurance market and covers nearly all kinds of risks, including celebrity body parts, oil rigs, airlines, and cyber risks. 17

18 Platform Services Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Orga Conference on Transatlantic Insurance Group Supervision Supervision. Through in-depth discussion of the major issues in transatlantic group supervision in break-out sessions, operational solutions were derived. The ICIR, in collaboration with the European Insurance and Occupational Pensions Authority (EIOPA) and the US National Association of Insurance Commissioners (NAIC), organized the international Conference on Transatlantic Insurance Group Supervision, which took place at Goethe University Frankfurt, Germany on September 7 8, During the conference, the supervisors presented current and emerging practices, as well as their views regarding group supervision and the challenges that transatlantic insurance groups pose to insurance supervisors. The insurance company executives also had the opportunity to present their views on the supervisory frameworks of the United States and Europe, the similarities and differences in group supervision as a result of operating in both jurisdictions, and where / how convergence in the supervisory approach would be beneficial to both supervisors and the insurance industry. The objective of the conference was to foster the transatlantic dialogue between supervisors and leading professionals of the insurance industry on the subject of Transatlantic Insurance Group 18

19 Platform Services nized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the ICIR +++ Events Organized by the Main results were that an effective group-wide supervision framework can only be formed by essential elements such as using a common sense approach of all supervisors when defining capital requirements and risk assessments, by creating a reliable data base, by understanding different regulatory standards, and by increasing the interaction between insurers and supervisors. Although the goals of supervisors are the same all over the world, i.e. policyholder protection, financial soundness of companies, and wellfunctioning insurance markets, there are obvious differences between EU and US approaches to supervision. Rate filings and market surveys are the major topics for the US, whereas under Solvency II a strong focus on the quantitative model under its Pillar I can be observed. Still, supervisors from both sides of the Atlantic share the belief that communication between the two continents is necessary for learning and improving, and this kind of openness and transparency will be beneficial to all. The conference received good feedback; especially the break-out sessions were positively commented on. We would like to thank our cooperation partners and notable participants from supervision, industry and academia from all over the world, for helping make the conference a success. There was consensus that holding a similar event next year is worthwhile, not only as an opportunity for getting to know one another better, but also for further discussion, provoking thought and action. 19

20 Platform Services ICIR Participation in Practice-oriented Conferences and Talks November 18, th Euro Finance Week, Frankfurt, Germany The focus of the 13th Euro Finance Week was on Finance, Business and Government- Joining up for Trust and Prosperity in Europe. Prof. Dr. Helmut Gründl moderated a panel discussion on Success Indicators for Bancassurance in Central and Eastern Europe. February 16 17, 2011 Conference on Old-Age Provision, Berlin, Germany Prof. Dr. Helmut Gründl was invited to give a talk on Guarantees in life insurance contracts from the customers perspective. May 30, 2011 International Conference of the Macedonian Insurance Regulatory Authority, Macedonia Prof. Dr. Helmut Gründl gave a talk on Challenges of Solvency II. Rayna Stoyanova spoke on Solvency II: Quantitative Requirements. June 14, 2011 Frankfurter Vorträge zur Versicherungswissenschaft Frankfurt Talks on Insurance, Frankfurt, Germany The seminar series of the Frankfurt Association for the Promotion of the Insurance Sciences took place at the House of Finance. Prof. Dr. Helmut Gründl gave a talk on Comments on Solvency II. September 6, 2011 EIOPA s Financial Stability Committee (FSC), Frankfurt, Germany Prof. Dr. Helmut Gründl gave a talk on Asset- Liability Management and Market Valuation of Insurance Liabilities as Current Issues of Solvency II May 26, 2011 VersicherungsForum-Veranstaltung, Mannheim, Germany Prof. Dr. Helmut Gründl introduced the ICIR and spoke on current developments in insurance supervision and regulation. September 13, 2011 VVaG und Solvency II (Mutual insurers and Solvency II), Cologne, Germany Prof. Dr. Helmut Gründl was invited to moderate this Handelsblatt conference. Project on Measuring Consumer Utility of Financial Advice, initiated by the German Federal Ministry of Food, Agriculture and Consumer Protection Between March and September 2011, researchers from the House of Finance worked on an interdisciplinary report on the subject of how to measure consumer utility of financial advisory services, and what information is required to this end. Besides investment funds and bank deposits, the report also takes life insurance products into account. In this context, Prof. Dr. Helmut Gründl and Sebastian Schlütter dealt with the question, how the methods proposed for the performance and risk reporting of investment funds could be transferred to life insurance products. Important parts of the procedure were, e.g. the analysis of today s legal requirements and best practice standards of post-contractual information provision. The authors conducted surveys and workshops with leading life insurers. Helmut Gründl appointed member of EIOPA s Insurance and Reinsurance Stakeholder Group Prof. Dr. Helmut Gründl has been appointed as Science Representative to the advisory board Insurance and Reinsurance of the European Insurance and Occupational Pensions Authority (EIOPA). 20

21 Lectures and Executive Training Goethe University Frankfurt Winter Semester 2010/2011 Risk Management and Insurance This is an elective course provided for Master of Science and Diploma students in the areas of Management, Money and Finance. The goals of the course are to understand the relevance and rationality of risk management, to systematize risk management instruments, and to learn to apply an adequate mix of risk management tools. Further topics of this lecture are the theory of insurance demand, the theory of insurance supply and problems stemming from information asymmetry. Winter Semester 2010/2011 Corporate Finance This course is for Bachelor students. It covers the broad area of corporate finance and lays a focus on corporate risk management and insurance decisions. Winter Semester 2011/2012 Asset and Liability Management of Insurance Companies Asset and liability management of insurance companies deals with the different tools and methods insurance companies have to optimize their risk position, and to meet liquidity and regulatory requirements. On a quantitative basis, supported by tutorials, this course comprises an insurer s investment policy, issues of insurance pricing and underwriting, reinsurance, reserves policy issues and equity capital endowment. A further focus lies on Solvency II and its implications for asset and liability management. Winter Semester 2011/2012 Allianz Insurance Business Game The insurance business game is offered in cooperation with, and sponsored by Allianz SE. The game is an innovative educational concept. It is a complex computer-driven simulation game in which students become virtual board members of insurance companies. They are responsible for the destiny of their own company and compete with other insurers. Students therefore receive a realistic insight as to how an insurer works. We thank Allianz SE for offering this opportunity to our students. Executive Education The ICIR was asked by the Deutsche Versicherungsakademie (DVA) and the Gesamtverband der Deutschen Versicherungswirtschaft (GDV) to jointly develop an executive education program for the insurance industry. This program intends to train insurance managers for the future requirements of Solvency II. Successful participants will receive one of the following certificates: Certified Risk Manager Insurance Solvency II (DVA) Certified Compliance Officer Solvency II (DVA) Certified Internal Auditor Solvency II (DVA) The program already started in the fall of Prof. Gründl and Sebastian Schlütter of the ICIR will hold some of the courses. 21

22 The ICIR in the Media The ICIR s activities have been widely reported on in the local, national and international press. For example, on October 11, 2010, Prof. Gründl was interviewed by the Frankfurter Allgemeine Zeitung about the new ICIR and the role of insurers during the recent financial crisis. An article about the main results of the joint dialogue event: Solvency II A Blueprint for Worldwide Solvency Regulation? was published in Versicherungswirtschaft, issue 5, on March 01, 2011, and the ICIR was presented in the Geneva Association Information Newsletter Progres Nr. 53, in June In August 2011, Prof. Gründl was interviewed by the Börsen-Zeitung about the development of Solvency II. In September 2011, the French journal L Argus de l assurance reported in its issue of September 16 on our Conference on Transatlantic Insurance Group Supervision. 22

23 imprint Publisher International Center for Insurance Regulation House of Finance Goethe University Frankfurt Grüneburgplatz 1 D Frankfurt am Main Tel: +49 (0) Authors Helmut Gründl Ming Dong Petra Petersen Sebastian Schlütter Rayna Stoyanova Design Stählingdesign 23

24 24 Goethe University Frankfurt House of Finance Grüneburgplatz Frankfurt am Main Germany