European insurers are facing a perfect storm of new and more exacting regulatory demands.
The UK Chancellor recently announced that savers would no longer be compelled to purchase annuities upon retirement. This represents one of the biggest changes to the UK pension regime for almost a century. Reactions in the market have been mixed but a majority have welcomed the announcement. There is no doubt that the changes introduce very significant challenges to firms with a heavy reliance on annuity business. But it also presents opportunities to firms that are able to develop innovative new products and services for customers who’ll want to leave assets invested longer into retirement. Even firms that believe these changes will be advantageous to them will need to rapidly change and refine their offerings in the face of such sudden change and fierce competition. Click here to read more.
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 PwC can help you
PwC has a global network of specialists who can help companies to develop an effective and cost-efficient approach to compliance. With assistance from PwC, 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 companiesSurer footing: Turning governance into competitive advantage Related challenges Governance and risk management Merger and acquisitionHuman capital GrowthMarket reporting.
PwC has a global network of specialists who can help insurers to strengthen their businesses in key areas: