European insurers are facing a more complex regulatory environment from national, regional and superregional authorities. The approaching date for implementation of Solvency II, January 1, 2016, is taking center stage. Member states are expected to transpose the directive requirements into local requirements with equivalence decisions this year.
Posts Tagged ‘Regulatory’
The National Association of Insurance Commissioners (NAIC) has been continuously engaged in the formulation of the regulatory standards that the International Association of Insurance Supervisors is developing, but has expressed several concerns due to the different legal, regulatory and accounting systems that exist. The NAIC does not want the Insurance Capital Standard (ICS), which is to be a consolidated group-wide standard, to undermine the legal entity capital requirements in the United States. As a result, the NAIC is trying to ensure that any ICS be supplemental to jurisdictional capital requirements and include a common methodology by which it achieves comparable (substantially similar) outcomes across jurisdictions. The NAIC is working through the ComFrame Development and Analysis (G) Working Group (CDAWG), which was formed early last year, to provide on-going input with respect to all developments in this regard.
(Re)insurers are being challenged as the regulatory environment becomes more complex, with regulation increasing considerably at multiple levels in numerous jurisdictions throughout the world. Insurers are facing new costs and pressures in their efforts to manage the regulatory landscape.
In the wake of the global financial crisis in 2008, significant regulatory change aimed at preventing/mitigating future crises was implemented. While the U.S. insurance regulatory framework did remarkably well in the protection of insurance consumers and companies in the United States during the financial crisis, it was, and will be affected by these reforms. Today, the results are having a profound impact on companies’ balance sheets and risk management practices. Although primarily aimed at larger, global insurers, the changes are so extensive that they may impact medium and small insurers to some extent. The question that most (re)insurers are asking today is how can they cope with the myriad regulatory, legislative and ratings changes and continue to maximize opportunities and maintain profitable growth.
Frank Achtert, Managing Director, and Markus Mueller, Senior Vice President, GC Strategic Advisory℠
After a long period of discussion and many delays, the new European insurance regulatory regime, Solvency II, will commence in January 2016. The rules will be compulsory for all insurance and reinsurance companies and groups in the European Economic Area. The Solvency II rules were developed over a period of more than 15 years, and there are many reasons for the long delay. Two notable reasons are differing business models from country to country and pressure on long-term guarantee products in the private pension system created by the low interest rate environment.
Changing Regulatory Landscape, Capital Requirements Will Impact (Re)Insurers’ Balance Sheets, Guy Carpenter Reports
Guy Carpenter today released its 2015 Mid-Year Report on the (re)insurance landscape. In addition to providing a brief recap of renewal activity highlighted in their release on July 9, the report assesses key industry trends, including a detailed assessment of mergers and acquisitions activity and highlights other notable themes such as cyber security risk, increased regulation and public-private partnerships.
A key feature of GC Capital Ideas is its Videocast series. Here we review recent video posts:
Guy Carpenter Appoints Former New York State Superintendent of Insurance James Wrynn as Vice Chairman of US Strategic Advisory
In the second video in the Holistic Balance Sheet Management series, Andrew Cox, Capital Optimization, Guy Carpenter and Niall Clifford, Financial Strategy Group, Mercer, explore how companies should approach investment risk and the link between investment strategy, risk appetite and reinsurance strategy. A key focus for insurance companies should be to link their investment strategy with their risk appetite metrics. While any increase in return on capital may seem very attractive, it is important that companies ensure that the risks they are taking are in line with their risk appetite and that they are aware of their constraints, allowing them to take risks in a measured way. Investment strategy should be considered alongside regulatory requirements, as a key aspect of Solvency II relates to how well each company understands the risks in its portfolio.