The Solvency of Insurance Companies: Control, Methods of Ensuring

<p>In this paper the object ofthe analysisis the process of improving the legislation on solvency requirements for insurance organizations and corresponding adaptation of companies on behalf of new methods to ensure solvency.</p><p>The subject of the study is the solvency requirements forinsurance companies ,reflected in the legislation whichregulates Russian insurance market , and prepared for implementation in the near future (&laquo;Solvency II&raquo;), and its impact on insurance companies.</p><p>The purpose of this study is the analysis of Russian insurance legislation affecting the solvency of companies, and its correlation with the international standards of solvency assessment of insuring companies.</p><p>The objectives of the study are</p><p>- to review and to analyzethe improvement of Russian solvency requirements for insurance companies</p><p>-to explore thecurrent methods of the solvency assessment inRussia</p><p>- to describe and to analyze the ways to ensure the solvency of Russian insurers (considering the role of actuaries)</p><p>- to review and to analyze the existing directive &laquo;Solvency I&raquo;</p><p>- to review and to analyzethe upcoming directive &laquo;Solvency II&raquo;</p><p>- toanalyzethe effects of recent changes in monitoring the solvency of insurance companies</p><p>- to highlight how the Russian insurance market trains to adopt directive &laquo;Solvency II&raquo;</p><p>- toanalyzemethods to ensure the solvency that will be available to insurers after the passing to &laquo;Solvency II&raquo;</p><p>The theoretical and methodological foundations of the study were the statistics, the legislative documents, the comments of professionals and experts of the insurance market, the scientific works of leading domestic and foreign scholars in the field of finance, credit and insurance and its analysis through the use of skills of data collection, processing and interpretation with respect to the theoretical knowledge and practical skills acquired during the development of professional educational programs.</p><p>The first chapter is devoted to the history of the development of the insurance market and insurance supervisory authorities in the Russian Federation. Concerning changes in insurance legislation, which were imposed by these organizations,an evaluative analysis is held and the description of the most important reforms and its key resultsare presented.</p><p>There are examined the solvency assessment requirements for RAS through comparison with a minimum size of the authorized capital and through the required solvency margin. Hence, the methods of solvency ensuring through insurance tariffs, insurance reserves, equity and reinsurance policy are suggested (the key role of actuaries is noted).</p><p>In the second chapter the international solvency requirements for insurance companies are established on behalf of Solvency I and Solvency II. The reasons for and the process of passing to the relevant directives are established and the formula for solvency assessment is given, after a critical evaluation of the latter the qualitative requirements for insurers are suggested. Moreover,the strengths and the weaknesses of the directives areidentified.</p><p>The final chapter presents the forecast of Russian insurance market development based on the latest changes in its regulation. Furthermore, it provides information regarding to the currentpreparation of Russian insurers to switch to the international standards of running an insurance business. In addition to this, the methods to improve the solvency of the insurance companythrough the underwriting policy, an effective insurance claims regulation, the motivation of front-office staff, the reputation and reinsurance policy are suggested. These methods are identified with the application of knowledge and skills acquired in the course of training in the specialty.</p>