Insurance practices gained increasing importance not only for understanding social and political constellations but also for demonstrating how insurance takes an active part in performing social and political relations. Recently, this is complemented by research on distinctive insurance product categories and their formative aspects for subjects and societies. However, even though practitioners, lawyers and consultants in the insurance field are very much aware of the challenges posed by contemporary innovations in this field, socio-political academic literature is rather silent on the relation of main (European) insurers and their part in producing socio political order.
Thus, this paper shows how the new Solvency II directive of the European Union (EU) provides a main instance to observe how regulatory innovation changed the way risk is to be confronted by the insurance sector. Whereas beforehand under the Solvency I regime insurers rather relied on a rules-based regulation (as still present in the US) the new risk regime relies on general principles where (similar to capital requirements regulation for banks in the EU) the respective firms’ balance sheets can be ’calibrated’ via internal models (ie. the own risk and solvency assessment). Whereas this framework is meant to diversify the tools to assess risk, it bears the danger of homogenizing the risk frameworks used by large insurers. In short the regulatory reform might introduce what it is meant to confront, i.e. systemic risk.
