Four key motivators are driving the development of solvency requirements and regulatory initiatives that are affecting reinsurers and insurers in the Asia Pacific, according to a Guy Carpenter report.
The motivators include 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.
According to the report, almost every country in the region has recently enacted or is planning far-reaching changes to solvency and other regulations, making progress on building more robust frameworks.
South Korea, Taiwan and Malaysia have progressed into their second round of risk-based capital (RBC) schemes.
Hong Kong is moving to its first RBC framework, which is anticipated in 2018. Singapore and Japan are among countries considering their own risk and solvency assessment (ORSA) frameworks.
Japan is seeking third-country equivalence status for Solvency II for reinsurance business and China’s Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Orientated Solvency System (C-ROSS) framework, which will affect how reinsurers and insurers conduct business, according to the report.
Mark Shumway, head of strategic advisory for the Asia Pacific at Guy Carpenter, commented: “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.”
