Dear friend,
What often starts off relatively modestly can, without due care and attention, sometimes mutate into something of a monster.
Take the case of the notorious drummer for The Who, Keith Moon. He grew up in Alperton, a suburb of Wembley in northwest London, and took up the drums during the early 1960s. Always a bit of a joker even at school, it wasn't until the joined The Who that his talent for waywardness really blossomed, in addition to his talent as a drummer. Moon developed a reputation for smashing his kit on stage and destroying hotel rooms on tour… you know the rest.
Of course Moon is an extreme example of something spiraling out of control, but really when one looks at the current state of insurance regulation I wonder whether it too is becoming something of a monster.
For European insurers Solvency II represents the most fundamental change to regulation in a generation, but that's just part – incredibly - of the overall picture. There are also new IFRS accounting standards to consider, the new basic capital requirement, and systemic importance to add to the mix, to select just a few of the massive changes facing companies.
Oh yes, and if these weren't enough the UK's Prudential Regulation Authority (PRA) this week said it will consult on the introduction of so-called 'resolution plans' for the market.
The PRA said the discussion paper is "likely to be of interest to policymakers and practitioners involved in the resolution of failed firms, as well as insurance firms for which similar proposals may be extended after a separate consultation at a later stage."
Great timing, eh? Why let insurers digest one monumental change when you can chuck in another half dozen new regulatory requirements on the side as well?
No wonder one senior CRO, talking to me earlier this week, lamented the 'tsunami of paperwork' that insurers currently have to face in order to appease the regulators.
Why is all this being thrown at insurers at the same time? Wouldn't it be more sensible to let insurers digest current changes first before moving on to issues such as resolution planning? What's the point of rushing all this through at the same time? It helps no-one and only adds to the already considerable burden that insurers are facing.
Please, please, regulators, in your gusto to make an impression and prove your dynamism give the market a chance to catch its breath.
Marcus Alcock,
Editor, InsuranceERM
