The Impact of the Low Interest Rate Environment on Insurance
The speakers indicated that the long lasting low interest rate environment resulted in the insurance business becoming unstable and conservative. It was indicated that in case low rates continue for longer time (a so-called “Japanese scenario”), more insurance companies will be exposed to insolvency.
Global Trends in Risk-Based Supervision
This issue was discussed from both regulatory and industry prospective. It was indicated that there is a world-wide trend to move towards risk-based approaches and international harmonisation.
From the regulatory side, speakers presented examples of jurisdictions as Argentina, Brazil, China, Jordan, the EU, Mexico, Singapore, Thailand, Turkey, the USA, where necessary changes in different supervisory pillars have been made. Some participants called for strengthening group supervision. Regulators also pointed at the number of challenges such as the lack of data and the lack of the relevant training or knowledge.
From the industry side, speakers warned about the risks of overregulation and called for a simple and efficient supervision that aims to facilitate problems rather than to stop insurers from further developments.
Global Standards: Upcoming Challenges in Implementation
The topic was discussed in 4 sessions dedicated to the impact on existing regulatory frameworks; challenges for the industry in bridging the gap in order to comply with global standards; the ways of how global standards can cope with emerging risks as well as the necessity to ensure consistent application of global standards in the long-run.
Consumer Protection as a New Supervisory Focus
It was emphasized that consumer protection has become part of the international agenda for insurance regulation and different countries have similar priorities with regard to this issue. Panellists spoke about the need to achieve higher transparency of insurance industry and intermediaries; the supervisors’ duty to confront industry actions that are to the detriment of consumers and the importance of having in place the product oversight rules.
At the same time some participants emphasized that industry should see it as its duty to deliver high level services and protection to people; in particular, tohelp them to make informed decisions by effectively describing the products and presenting “such documents that consumers will understand”.
Doing Business in Emerging Markets: Regulatory Developments
Panellists discussed possible steps that regulators can make in order to improve the penetration of insurance companies on the emerging markets. It was noted that companies entering such markets need to properly identify risks they will or might be facing and provide the right coverage for them. At the same time supervisory authorities in such countries were advised to always orient towards already existing good practices, to engage in dialogue with new comers, to observe the proportionality principle and to bear in mind the costs of regulation.