European insurers are facing a perfect storm of new and more exacting regulatory demands.
Solvency II, the planned reform of prudential standards for European insurers, is likely to require a major overhaul of risk and capital management, along with supporting information, documentation and modelling systems.
The EU Reinsurance Directive seeks to provide a common system of regulation and mutual recognition across Europe. This includes a new definition of finite reinsurance that may preclude many existing contracts. The other key provision is an easing of the regulatory restrictions on securitisation, which could pave the way for a considerable increase in risk transfer to the capital markets.
Sarbanes-Oxley requires compliant firms to tighten up and validate the effectiveness of their internal control frameworks. Insurers are also facing a raft of local regulatory changes, including tougher provisions on customer protection and
Anti-money laundering.
The key challenge is how to integrate these regulatory demands into ‘business as usual’ and use the investment as a basis for improving governance, decision-making and strategic assurance.
Enterprise-wide risk management can help to provide a reliable and cost-effective platform for compliance across different jurisdictions and specific compliance requirements. More sophisticated risk-based capital management can not only help to underpin compliance with new prudential regulation, but also provide a better understanding of the trade off between risk and reward, leading to smarter capital allocation and more sustainable value creation.
How PricewaterhouseCoopers can help you
PricewaterhouseCoopers has a global network of specialists who can help companies to develop an effective and cost-efficient approach to compliance. With assistance from PricewaterhouseCoopers, you can turn compliance into an opportunity to improve management processes and strengthen confidence in the business.
Of further interest
Anti-Money laundering: A global financial services issue
Protecting the Brand: The evolving role of compliance functions and the challenges of the next decade
New accounting, reporting and regulatory developments for insurance companies
Surer footing: Turning governance into competitive advantage
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