The Dutch Association of Insurers (Verbond van verzekeraars) have published a Position Paper (prepared by the Boston Consulting Group) entitled How to achieve a more crisis-resistant insurance sector in the Netherlands. The aim of the Position Paper is to contribute to the ongoing discussion on how to create a more stable and secure insurance sector, better adapted to the negative consequences of the financial crisis.

The Position Paper contains recommendations from the Dutch Association of Insurers. One of the (four) recommendations is that subsidiaries of foreign insurance companies must be independently capitalised in order to prevent negative consequences from possible capital inadequacies at the level of the parent company. The report states that all subsidiaries of foreign insurance companies should have strict capital requirements, as required by Solvency II. The present Solvency I requirement, the Position Paper states, are insufficient in the current economic climate. The question remains how Solvency II will ultimately provide for the capital requirements of subsidiaries of foreign insurers.

In addition, the Position Paper questions whether capital can also be provided in the form of parent guarantees rather than by maintenance of own capital. According to the Position Paper local subsidiaries of foreign insurance companies should be capitalised independently from their parent companies, ie not by means of parent guarantees. Specifically the Position Paper suggests that SCR capital should be maintained at the level of the subsidiary.

The Position Paper further concludes that the regulators should become more active in monitoring this area. In particular the active position of the regulator should be reviewed in light of the present discussions regarding Solvency II. The Solvency II directive should provide for a coordinated approach by European regulators as regards insurance companies that operate in several European jurisdictions.