IAIS published the Global Insurance Market Report (GIMAR) for 2019. The report discusses the global insurance and reinsurance sectors, with focus on the performance of the sector, key risks facing the sector, and key developments in the global insurance market from a supervisory perspective. The report also presents the results of the Global Reinsurance Market Survey covering 47 reinsurers in nine jurisdictions in North America, Europe, and Asia while linking the financial position of reinsurers to the broader financial economy.
The GIMAR report discusses the performance of life insurance sector within a prolonged low-yield environment. It highlights that the sector may be subject to various risks and challenges, given a potential rate increase or a sluggish growth of guaranteed rate products sales. The report for this year also focuses on the specificities of cyber insurance and how insurers tackle risk pricing in light of the lack of historical data sets. The report presents the key challenges and regulatory considerations associated with cyber insurance. The report recommends that supervisors need to share information and best practices to enhance their own ability to evaluate the pricing and exposure of insurers within their jurisdictions. They also need to consider how they can support an integrated approach to cyber risk that will adequately reflect the risk in insurers’ strategy and risk appetite. Initiatives are under way in several countries to foster greater risk awareness and to push insurers to adopt conscious risk management and supervision, but additional efforts are required by both supervisors and insurers.
One key finding of the Global Reinsurance Market Survey is that the reinsurance market is still recovering and further consolidating its capacity following the series of severe natural catastrophes that took place in 2017. However, capital has proven an effective loss buffer when held at sufficient levels. The Survey demonstrates the extent to which the reinsurance industry relies on retrocession as a tool to reduce and diversify risk. If the trend of declining retrocession persists, the industry may experience a shift toward other risk-mitigating mechanisms. Equity and debt securities still remain the largest asset classes for investment in the reinsurance industry, cumulatively accounting for 77.5%. Short-term portfolios tend to be invested in highly liquid securities, while reinsurers’ exposures are mainly concentrated in the insurance market.
Keywords: International, Insurance, Reinsurance, GIMAR, Macro-Prudential Policy, Cyber Insurance, Life Insurance, Regtech, Global Market Reinsurance Survey, IAIS
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The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
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The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.