IAIS Publishes Global Insurance Market Report for 2018

The report for 2018 discusses how U.S. life insurers use derivatives for hedging purposes and how insurers tend to favor their home jurisdictions as investment destinations. It also looks at the liquidity of insurance asset portfolios and the macro-prudential tools supervisors are employing to test for system-wide shocks. The report showcases several national initiatives to develop and implement a macro-prudential surveillance framework for insurance. The survey of practices of macro-prudential supervision covered seven mature insurance jurisdictions representing North America, Europe, and Asia. In particular, the surveyed jurisdictions include Bermuda, EU (including France, Germany, and UK), Korea, Singapore, and the United States. The results indicate significant overlap of practices among the participating jurisdictions. Stress tests are used extensively as tools of macro-prudential surveillance. Some jurisdictions develop the process in-house, such as Bermuda and Singapore, while others rely partly on supranational authorities such as EIOPA to perform these tests.

The report also examines the benefits, risks, and challenges of increased digitalization of the global insurance sector. The discussion on digitization of the global insurance industry covers the significant trends in insurtech, along with the risks and potential regulatory implications for consumer protection, operational resilience, and cyber risk. Overall, the insurance sector is expected to change substantially in the coming years due to ongoing digitization efforts. Moreover, this edition of the report discusses the global (re) insurance sector in 2018 from a supervisory perspective, focusing on the recent sector performance and key risks. By assessing developments and risks across the financial system, the GIMAR plays an important role in the IAIS macro-prudential policy and surveillance framework. 

Finally, the report presents the results of the IAIS Global Reinsurance Market Survey and these results are computed using data provided by 47 reinsurers in nine jurisdictions in North America, Europe, and Asia. The results of the survey showed that, even though the reinsurance market was severely hit by the fallout from the numerous natural catastrophes in 2017, there was sufficient capacity that acted as a loss buffer. The survey also showed how the reinsurance industry relies on retrocession as a tool to reduce and diversify risk. Equity and fixed-income securities still remain the largest asset classes for investment in the reinsurance industry, while counterparty exposure continued to grow for the fourth consecutive year.

Keywords: International, Insurance, Reinsurance, GIMAR, Global Reinsurance Market Survey, Insurtech, Regtech, Blockchain, Macro-Prudential Policy, Solvency II, IAIS