Rules of the Solvency II Directive on the influence of the capital status of insurers on reinsurance

Čolović Vladimir (Pravni fakultet Univerziteta Union, Beograd), vladimir.colovic@pravnifakultet.edu.rs

The Solvency II Directive regulates the performance of insurance and reinsurance activities, supervises the work of insurance companies and reinsurance companies, and addresses other issues in the field of insurance. The implementation of the Directive was postponed several times, and it finally became effective in the territory of the European Union (EU) in 2016. The Solvency II Directive covers insurance and reinsurance. It defines reinsurance as an activity consisting of risks ceded by insurance companies, whether they are from EU member states or third countries. It defines reinsurance as one of the ways of mitigating risk and preserving the stability of insurance companies and the insurance market. Reinsurance is viewed through capital solvency and the minimum required capital, the calculation of which depends on the accepted calculation method. According to the Solvency II Directive, the insurer is obliged to reinsure the surplus it cannot cover with its own funds for each insurance contract. In the following paper, the author pays special attention to the impact of the Directive on the insurance market in the Republic of Serbia, as well as to the legislative solutions on reinsurance present in domestic legislation.

Keywords: Solvency II, direct insurance, reinsurance, solvent capital, minimum capital, risk