Evolution of solvency capital required in Spanish insurers until solvency II

A fundamental pillar of our society is to ensure the quality of insurance companies through the implementation of its liabilities to policyholders. In fact, the laws and the supervisors are looking for the protection of insurance consumers and markets becomes efficient, stable and safe-keeping. On the other hand, the capital of the insurance company is an element of guarantee that it can meet liabilities with policies, constitutes one of the main instruments for the protection of consumers. The new framework for the valuation of the solvency of insurance companies is regulated into the European Union by Directive 2009/138/EC of 25 November (Solvency II). The aim is to measure and valuate the whole risks that the company has. This should allow quantifying the appropriate level of technical provisions and the amount of adequate capital according to the risks to which it is exposed. This approach is, up to now, the last framework of the solvency for insurance companies. It has taken more than 30 years to reach the current regulation of the solvency guaranteeing capital. This paper analyzes the evolution in the calculation of the capital, from a purely static approach of the company to a dynamic view of the insurance business.