There is an increased focus globally on international insurance regulation driven by efforts within the G20 major economies to strengthen the international regulatory regime since the financial crisis of 2007-2008. There is some uncertainty regarding the exact form of all pending regulatory changes. However, it is clear that regulatory and compliance costs are rising, and some insurers will likely face higher minimum capital requirements.
Executive SummaryThe incremental gains of post-crisis regulations could be offset, or even outweighed, by the extra costs of the increased regulatory burden and potential for inconsistent requirements across jurisdictions involved in enhancing insurance regulatory standards, analysts from Fitch Ratings write. Here, they provide the status of increased regulations and higher capital standards for internationally active insurers—both SIFIs and non-SIFIs.
The incremental gains of such regulations could therefore be offset, or even outweighed, by the extra costs of the increased regulatory burden and potential for inconsistent requirements across the numerous jurisdictions involved in enhancing insurance regulatory standards.
Global Systemically Important Insurers
The International Association of Insurance Supervisors’ first area of focus is systemic risk. The financial crisis highlighted the interconnected nature of financial firms and the widespread economic costs when they experience stress. As part of a wider initiative by the G20 and Financial Stability Board (FSB), the IAIS identified nine global systemically important insurers (G-SIIs) in July 2013:
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