Reinsurers are looking confidently into the future. Solvency II, the new regulations on equity requirements planned by the EU-Commission for 2007 are offering many advantages for well set-up companies like Hannover Re. ‘Solvency II introduces increased professionalism at all levels of the reinsurance business’, according to the recent commentary by the ‘Handelsblatt’. The EU guardians of the insurance business are pressing for a risk-oriented capital position, an approach similar to the one applied by the rating agencies when evaluating the financial strength of a reinsurer.

In the future Solvency II will include the risks contained in the invested assets of a reinsurer when calculating their minimum level of required equity. This forces the industry to a yet more conscientious handling of its risks. Additionally, it will be more strongly considered when evaluating an insurance risk what it truly entails. Thus, it will be differentiated between an insurer only selling private liability insurance and an insurer, which also covers high-risk pharma insurances. Therefore, so the ‘Handelsblatt’, “only the ones that know their risk situation well, will be able to deal with Solvency II easily”.

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Omni Risk President and Chairman John Rooke is considered one of the foremost authorities on reinsurance. As a result, Omni Risk has extreme knowledge and relationships in the reinsurance market.

In certain situations, Omni Risk Management, Inc. can use our expertise in reinsurance markets for the formation, organization and management of captive insurance programs to assist our clients to reign in insurance costs. If a client’s insurance expenditures are more than $1,000,000 a year, has a better than industry average experience with regard to losses and is paying high premiums, Omni Risk, our attorneys and accountants would determine the feasibility of the formation of a captive for that client.

Historically, a client can save on its insurance costs through the formation of a captive, since this removes the profit and the high administrative costs passed on to the insured by the insurer. Very large savings can be achieved if our client is in an industry with historically high rates and the client’s loss experience is better than the industry average. When the use of a captive is recommended, it can be an important option for the right client.

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