03 June 2010
Published in: Corporate strategy, Risk governance, Regulation - supervision
Survey shows CEO regulation concerns
Macro-economic factors and regulation are two of the most worrying concerns facing insurance CEOs, a survey of world insurance industry leaders has shown.
Delegates the 37th annual general assembly of The Geneva Association, a think tank and lobby group representing the CEOs of 80 major (re)insurers, were asked to respond anonymously to 10 questions.
Recent events in the European capital and debt markets showed a considerable influence on the answers, with 79% listing either inflation/deflation or the sovereign debt crisis as the number one threat to insurers.
Of the regulatory concerns, the response to the financial crisis was seen as a bigger threat than Solvency II. A huge proportion, 87%, believe that systemic risk regulation will have a significant impact on insurance activities, with 90% indicating that a lack of knowledge of the insurance sector has played a significant or highly significant role in moves to include insurers in systemic risk.
Solvency II is still seen as positive by a small majority of CEOs, 56%, with concerns focusing on the details of its implementation, many of which are still undecided. As one CEO said, "Getting Solvency II right is of crucial importance. Any unjustified prudence may have a long-lasting negative impact on the industry."
Other results showed:
- 76% believe a comprehensive international regulatory framework for financial stability is not likely within two years
- 50% believe a comprehensive international regulatory framework for financial stability is not likely within five years
- 43% believe recession in developed economies is the most likely economic scenario
- Two thirds expect a mid or high growth trajectory in the developing world
Dr Nikolas von Bomhard, chairman of The Geneva Association and CEO of Munich Re, said: "Whilst it is understandable that macro-economic factors are the most serious concern to insurers, that regulation is listed as a key threat is a demonstration of how seriously potentially mistaken regulation could affect our industry."
The Geneva Association has argued since the financial crisis that insurers do not pose a systemic risk to the wider economy [IERM, Regulation/supervision, 26 February 2010, "Insurance CEOs enter systemic risk debate"] . "As an industry we have been very clear that we are not against more regulation, as long as it is the right regulation," said von Bomhard. "We believe that ongoing discussions, like the ones on Solvency II, are showing the potential for real progress. It is up to regulators and governments to set the course for the next generation of insurance regulation and it is crucial that they get it right."
Links
See also:
IERM, Risk governance, 26 May 2010, "Treat systemic risk as an emerging risk"
IERM, Regulation/supervision, 18 February 2010, "Do insurers pose a systemic risk?"