24 June 2014 Insurance

Regulation must be unified for global clarity

The lack of a unified global regulatory system is creating issues within the industry according to Nikolaus von Bomhard, chairman of the board of management at Munich Re.

“We’re not on all on one ticket about how to look at a balance sheet. This creates problems with consistency,” he said during a panel discussion at the International Insurance Society (IIS) Seminar in London this week.

Barry Stowe, Prudential Corporation Asia chief executive, another panellist, agreed that a lack of consistency can cause issues, but said that regulation should not always be viewed as a bad thing, despite its perception at times.

“Some regulation does work, but it must be enforced by dual purpose regulators who are looking to both supervise and grow the industry at the same time,” he said.

Ace Group USA chairman and CEO, Evan Greenberg, said that the issue of treating both banks and insurers as the same needs to be addressed.

“We don’t have liquidity issues that banks have – we are different and this is not a one country thing,” he said.

The panel, which also included Lloyd’s CEO, Inga Beale and Willis CEO Dominic Casserley, agreed that distinguishing the end result was necessary in order to be successful.

“The US focused on protecting its policyholders, while regulation such as Solvency II protects policyholders and shareholders as well as policyholders for example,” said Greenberg. “We need to work out what problems we’re trying to solve.”

Von Bomhard spoke of addressing the issue of growth so soon after the financial crisis.

“Many assume that now that the financial crisis is solved, it’s time to start looking for growth again. However, there is still a tremendous oversupply in the industry – some $70-90 billion. The question is, are you ready to say to shareholders that you will not grow in certain areas right now?” he said.

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