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The aporetic financialisation of insurance liabilities: Reserving under Solvency II

Published online by Cambridge University Press:  09 November 2023

Charalampos Fytros
Charalampos Fytros*
Affiliation:
University of Piraeus, Greece
*
Corresponding author: Charalampos Fytros, University of Piraeus, Central Building 80, M. Karaoli & A. Dimitriou Street, 18534, Piraeus, Greece. Email: [email protected].
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Abstract

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The valuation of insurance liabilities has traditionally been dealt with by actuaries, who closely monitored underlying illiquid features, assumed a long-term perspective, and exercised their own subjective, expert judgment. However, the new EU regulatory regime of Solvency II (S2) has come to require market-consistent valuation supplemented by a risk-sensitive capital. This is considered an unwanted shift towards short-termism that is misaligned with the industry's long term and countercyclical character. The new principles place the ‘technicalising’ logic of financial economics over ‘contextualising’ actuarial know-how. Following existing analytics of valuation from the ethnography of reinsurance markets and the social studies of finance, such requirements appear either as an alarming attack against the actuarial component of traditional valuation practice, or else as a preserver of it, through a process of enfolding at the heart of the financialisation project. This article holds that the case of S2 challenges both these analytics of valuation. S2’s financialisation project, precisely by attempting to construct itself, deconstructs itself into an actuarial project, in a recurring, aporetic process. In this respect, fair (or otherwise) valuation remains always undecidable, inconclusive, and thus responsible.

Keywords

FinancialisationinsuranceSolvency IIfair valueactuarial valuationaporiaautoimmunity
Type
Article
Information
Finance and Society , Volume 7 , Issue 1 , 2021 , pp. 20 - 39
Creative Commons
Creative Common License - CCCreative Common License - BYCreative Common License - NCCreative Common License - ND
This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-No Derivatives licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits noncommercial re-use, distribution, and reproduction in any medium, provided the original work is unaltered and is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use or in order to create a derivative work.
Copyright
© 2021 The Author(s)

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