Compliance Risk in the European Insurance Industry: Setting a Common Playing Field

Abstract

This paper investigates the concept of compliance risk in the European insurance industry. In the absence of a common definition and subsequent blurred perimeter at European and national level, I propose a shared definition and a clear indication on which risks have to be included under the umbrella of the compliance risk. I approach the topic via a survey extended to insurance companies based in Germany and Austria by posing a set of questions on the perception, materiality, approaches, models and foreseen evolution on the compliance risk. Within the limitation of the approach and of the sample, the survey spots the lower priority assigned by the companies to the compliance risk in the year of enforcement of Solvency II and the subsequent initial stage of evolution of the models and the approaches in place to manage it. The survey allows inferring a clear and shared definition of the compliance risk among the insurers and provides valuable indication for setting its perimeter.