As if a sputtering expansion in developing markets wasn’t bad enough, government policymakers in the developed world will make things difficult in 2015 for insurers around the world, Standard & Poor’s has concluded in a new report.

At issue, S&P said, is a collective overabundance of caution from governments trying not to enable another financial crisis.

“Compounding the challenges for all insurers is policymakers’ risk-aversion, demonstrated by their pursuit of improved solvency standards, systemic importance designation, recovery and resolution planning, a global capital standard, and new product and conduct regulations,” the rating agency concluded.

S&P analysts wrote that the issue is more of a factor in the long term, leading to industry uncertainty that is counterproductive.

“The upheaval in the way insurers are regulated and supervised does not pose near-term threats to ratings, but it looks set to continue for the rest of the decade and creates a backdrop of uncertainty for insurers, for their investors and for their ratings,” S&P said.

According to the report, the designation of nine carriers as “Global Systemically Important Insurers” that would face International Association of Insurance Supervisors-sanctioned global capital standards by 2016 is of particular concern. American International Group Inc., Allianz SE and MetLife are among the affected companies.

“Most insurers regard this timetable as aggressive, and one prominent regulator called it ‘reckless,'” S&P said in its report. “It is not clear at this stage whether and how this will co-exist with local solvency regimes.”

S&P said it believes most insurers designated as systemically important probably would have preferred to avoid the status “because of the additional regulatory (and possibly capital) burden.”

On the other hand, S&P argued that these insurers could possibly market that same status as a positive thing, considering the additional capital requirements they will meet to be shown as stable.

Another policy-related issue: S&P said it expects the global regulatory focus to shift from solvency toward product and conduct regulation over the next 10 years. A number of initiatives are raising red flags, including a European Union push to reform how insurance products are designed and distributed (Packaged Retail Investment Products and Insurance Mediation Directive initiatives) and a U.S. move to increase fiduciary standards “to those who render investment advice to retirement plans and individual retirement accounts.”

Other policy moves that S&P holds up with caution: a U.K. removal of a “requirement to purchase an annuity on the grounds of freedom of choice” and an Australian move to require its citizens to buy an annuity. That action will require more regulatory reform that will touch on everything from product design to tax policy and consumer sentiment, S&P said.

S&P expects remaining low interest rates, in part, to force continued stagnation for insurers in developed markets. Expectations are that growth will remain relatively strong in developing markets, but that will slow as a variety of “idiosyncratic problems” hit the industry, according to the report.

S&P’s assessments are detailed in its new report: “Global Insurance Credit Outlook 2015: Policymakers Prolong Pain for Developed Markets’ Insurers.”

Source: Standard & Poor’s