Pillars of wisdom

European insurance regulation is shifting from Pillar I rulebook to Pillar II dialogue. But the dialogue may be evolving into a poker game. Aaron Woolner reports

For years, the relationship between European life companies and their supervisors has been dominated by a debate over rules-based capital requirements - known as Pillar I in the language of financial regulation.

But now the debate is moving on. Alongside Pillar I is Pillar II, the supervisory review process. Up to now overshadowed by the more prominent arguments about capital requirements under Solvency II, Pillar II amounts to a conversation between supervisors and the companies they