New solvency regulations driven by four key motivators
Guy Carpenter has published an assessment of the development of solvency requirements and regulatory initiatives that are impacting re/insurers in the Asia Pacific region.
According to the report, these developments are driven by four key motivators: the need to improve resiliency post-catastrophic loss; to increase oversight in a post-great recession world; to follow best practices from the banking and international insurance sectors; and finally, to satisfy domestic political pressures.
“Many recent updates to regulations in the region have been, or will be, enacted to bring regulations in line with the International Association of Insurance Supervisors’ Insurance Core Principles, International Financial Reporting Standards and Solvency II,” said Mark Shumway, head of strategic advisory for Asia-Pacific.
“While these international frameworks provide a base for rule-making, cultural appreciation for the underlying principles is essential.”
Nearly every country in the region has recently enacted, or is planning, far-reaching changes to solvency and other regulations, taking the necessary steps to build more robust frameworks.
Examples of recent solvency and regulatory developments covered by Guy Carpenter include:South Korea, Taiwan and Malaysia in their second round of risk-based capital (RBC) schemes; Hong Kong moving to its first RBC framework, expected in 2018; and Australia and Malaysia implementing Internal Capital Adequacy Assessment Process requirements.
Singapore and Japan are among the countries considering an Own Risk and Solvency Assessment framework; Japan is seeking third-country equivalence status for Solvency II for reinsurance business; and China’s Insurance Regulatory Commission is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how re/insurers conduct business.
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