Aon Benfield, the global reinsurance intermediary and capital advisor of Aon Corporation today launches its report Evolving Criteria – A Global Perspective of Rapidly Changing Regulatory, Accounting and Rating Agency Frameworks. The report highlights how the industry is on pace to face more stringent capital requirements and regulatory frameworks.
Regulatory, accounting and rating agency changes are occurring rapidly globally, albeit at a different pace by region. Further, the dominance of one driver over the other differs by region:
-
Europe: Solvency II and International Financial Reporting Standards (IFRS) insurance contracts accounting are dominating discussions both at board and staff levels. The constantly changing timetable and underlying criteria are making it difficult to fully anticipate and plan for all possible outcomes.
-
U.S.: Rating agencies continue to exert the most influence on companies in terms of capital adequacy, earnings management and Enterprise Risk Management (ERM), while the National Association of Insurance Commissioners (NAIC) is still forging ahead with its Solvency Modernization Initiative (SMI), which could bring about the most significant regulatory changes in decades. The Financial Accounting Standards Board (FASB) and The International Accounting Standards Board (IASB) are working together towards convergence on IFRS, despite pushback against changes in Generally Accepted Accounting Principles (GAAP).
-
Asia Pacific: Rating agencies are starting to have a greater presence across the region, as a number of companies have started, or are in the process of, obtaining initial ratings. Given that a majority of companies remain unrated in the emerging markets, local regulators continue to drive changes across the local insurance industries. However, this differs dramatically from the developed markets such as Japan, New Zealand and Australia, where this responsibility is shared by both the regulators and rating agencies.
-
Latin America: Local regulators have recently been working to strengthen existing regulatory frameworks or revamp them entirely.
Kelly Superczynski, global head of Aon Benfield Analytics’ Rating Agency Advisory, said: “As the industry continues to become a more global, fluid marketplace, stakeholders expect greater consistency and transparency around regulation and accounting. As recent events such as the natural catastrophe activity, 2008 financial crisis and European and U.S. debt crises show us, the industry is continuously tested both in terms of strength of capital and also strength of core risk management principles. We expect this trend to continue, which means that companies will have to continue to work hard to stay ahead of the curve.”
To view the Evolving Criteria – A Global Perspective of Rapidly Changing Regulatory, Accounting and Rating Agency Frameworks – report, please follow the link
|
