System of governance in insurance companies according to directive 'Solvency II'

Abstract

The author of this article examines the system of governance in insurance companies according to new regulatory regime 'Directive Solvency II' which entered into force in the European Union on 1 January 2016. A lack of corporate culture in the financial sector is one of the main reasons of the global economic crisis. In order to eliminate the problems raised in connection with the culture of corporate governance, the creators of the Solvency II Directive regulated in detail how the system prescribed by the management in the insurance company must operate. The author further analyzes the role of each of the four key functions in the insurance companies provided for in the Directive Solvency II. These key functions are: risk management, internal control system, internal audit and actuarial. In the last part of the article the author estimates that the provisions of the Serbian Insurance Act relating to the system of governance are largely harmonized with the Directive Solvency II.

Keywords

• directive solvency ii
• corporate governance
• system of governance in insurance companies
• risk management
• internal control system
• internal audit
• actuarial