ING Direct 2011 Annual Report Download - page 251

Risk management continued
ING Insurance
ONGOING CHANGES IN THE REGULATORY ENVIRONMENT
• The most important regulatory issue for the insurance industry is the continued development by the European Union of the Solvency II
capital adequacy framework. Solvency II is intended to be based on economic, risk-based and market-consistent principles whereby
capital requirements across Europe are directly dependent on an insurer’s assets and liabilities. However, some of the proposed
measures currently under discussion are considered unduly conservative and deviate from economic principles. It is therefore very
important that the Solvency II framework, as originally envisaged, will become market-based, avoids pro-cyclicality and should be able
to withstand market volatility. The EU politicians and regulators drafting the framework should therefore ensure that the measures to
be implemented are robust enough throughout the cycle. ING Insurance Eurasia is working actively with its colleagues in the insurance
industry to advise EU politicians and regulators come up with concrete proposals that further these objectives.
• The insurance business is sensitive to regulatory action, for instance regulations affecting taxes, pension regulation and customer
protection. In the first quarter, the European Court of Justice ruled that price differentiation based on gender for any insurance products
sold in the European Union from 21 December 2012 onwards. This will only impact new business and exclude repricing and extensions.
Pension fund law changes in Poland were approved and signed at the end of March 2011. These changes are expected to negatively
impact future earnings.
• The Dodd-Frank Act, its implementing regulations and other financial regulatory reform initiatives could have adverse consequences
forthe financial services industry, including ING Insurance US and/or materially affect the results of operations, financial condition and
liquidity. The 2010 Dodd-Frank Act directs existing and newly-created government agencies and bodies to conduct certain studies and
promulgate a multitude of regulations implementing the law, a process that is underway and is expected to continue over the next few
years. While some studies have already been completed and the rule-making process has begun, there continues to be significant
uncertainty regarding the results of ongoing studies and the ultimate requirements of those regulations that have not yet been adopted.
Until final regulations are promulgated pursuant to the Dodd-Frank Act, the full impact of the Dodd-Frank Act on the businesses,
products, results of operation and financial condition will remain unclear.
• State insurance regulators and the National Association of Insurance Commissioners (NAIC) regularly re-examine existing laws and
regulations applicable to insurance companies and their products. Changes in these laws and regulations, or in interpretations thereof, are
often made for the benefit of the consumer at the expense of the insurer and could have a material adverse effect on the financial condition
and results of operations. The NAIC continues to work on comprehensive reforms related to life insurance reserves and the accounting for
such reserves, although the timing and extent of further changes to statutory reserves and reporting requirements are uncertain.
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
249ING Group Annual Report 2011