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A Comparative Assessment of Basel II/III and Solvency II

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  • Nadine Gatzert

    (Friedrich-Alexander-University of Erlangen-Nürnberg, Lange Gasse 20, D-90403 Nürnberg, Germany. E-mails: nadine.gatzert@wiso.uni-erlangen.de; hannah.wesker@wiso.uni-erlangen.de)

  • Hannah Wesker

    (Friedrich-Alexander-University of Erlangen-Nürnberg, Lange Gasse 20, D-90403 Nürnberg, Germany. E-mails: nadine.gatzert@wiso.uni-erlangen.de; hannah.wesker@wiso.uni-erlangen.de)

Abstract

In the course of creating a single European market for financial services and in the wake of two financial crises, regulatory frameworks in the financial services industry in the European Union have undergone significant change. One of the major reforms has been the transition from static rules-based systems towards principles-based regulation with the intent to better capture the risk situation of an undertaking. For insurance companies, the regulatory framework Solvency II is being finalised and is scheduled for implementation after 2013. At the same time, the regulatory regime for banking, Basel II, has been revised in response to the financial crisis; the new version is Basel III. The aim of this paper is to conduct a comprehensive and structured comparative assessment of Basel II/III and Solvency II in order to detect similarities and differences as well as the benefits and drawbacks of both regimes, which might be profitably addressed. The comparison is conducted against the background of the industries’ characteristics and the objectives of regulation.

Suggested Citation

  • Nadine Gatzert & Hannah Wesker, 2012. "A Comparative Assessment of Basel II/III and Solvency II," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(3), pages 539-570, July.
  • Handle: RePEc:pal:gpprii:v:37:y:2012:i:3:p:539-570
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    Cited by:

    1. Bryce, Cormac & Webb, Rob & Cheevers, Carly & Ring, P. & Clark, G., 2016. "Should the insurance industry be banking on risk escalation for solvency II?," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 131-139.
    2. Gatzert, Nadine & Martin, Michael, 2012. "Quantifying credit and market risk under Solvency II: Standard approach versus internal model," Insurance: Mathematics and Economics, Elsevier, vol. 51(3), pages 649-666.

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