“european Insurance Regulatory Landscape: Navigating Compliance” – Rapid advances in technology are changing the way insurance and pension products are designed and the way consumers shop. These developments benefit businesses and consumers, but may also bring certain risks.

This rapidly changing environment presents new opportunities and challenges for leaders. Keep pace with the various aspects of innovation to ensure that regulatory and supervisory frameworks consider both the opportunities and risks that innovation brings.

“european Insurance Regulatory Landscape: Navigating Compliance”

Is actively evaluating these changes and is prepared to consider the impact on its own and its members’ insurance and pensions industries.

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The Digital Transformation Strategy was published in December 2021 to provide a systematic, balanced and comprehensive approach to ongoing technological change and oversight of the European insurance and pension markets.

In February 2022, the ESAs published a joint report on digital finance and called on the European Commission to issue guidance on digital finance and related issues. The report sets out ten cross-sectoral and two insurance-specific recommendations to ensure that the EU’s regulatory and supervisory framework is fit for the digital age.

In its strategy, the company has identified five key long-term areas for its contribution to digitization.

Work with the European Commission on the development of a financial information space on sustainable finance and pension data monitoring systems, as well as on open insurance developments.

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We believe that AI will play an important role in the digital transformation of insurance and pension markets, so we will try to use powerful AI systems while ensuring financial inclusion.

It is important to assess the prudential system in the context of digital transformation to ensure financial stability while increasing coordination of supervision in proper assessment of digital activities and risks.

Cybersecurity and ICT resilience have long been identified as policy priorities, and the coming years will focus on implementing these priorities, including the recently adopted Cloud Computing and ICT Directive and the upcoming Digital Resilience Act. (DORA).

When properly evaluating the relevant digital transformation process, it is necessary to take into account the investment of new assets such as crypto-assets, as well as the trend of “platforming” of the economy and the type of operations developed by insurance institutions. .

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Continue to support the development of the single market in times of change by promoting cross-border and cross-sector cooperation, promote the development of innovation intermediaries, and address the opportunities and challenges of fragmented value chains and platform economies.

And NCAs must strive to become digital, customer-centric and data-driven organizations to achieve their strategic goals effectively and efficiently. Opinions expressed in writing are those of the author. Other teams may have different perspectives and make different investment decisions. The value of your investment may be more or less than what you originally invested. The third-party information used is believed to be reliable, but its accuracy is not guaranteed. For professional, institutional or accredited investors only.

Changes in American industrial laws occur slowly, sometimes at a glacial pace. The recent changes by the National Association of Insurance Commissioners (NAIC) to fixed income insurers’ investment risk-based capital (RBC) premiums are no exception. US insurers were supposed to start reporting more detailed earnings data in late 2020, but the NAIC’s new bond risk premium won’t take full effect until late 2021, but it’s finally here.

It remains to be seen how these regulatory changes will affect insurance companies’ day-to-day portfolio management and/or long-term strategic asset allocation decisions. At the time of this writing, US insurers are in a stable position in terms of their assets (Figure 1). The NAIC notes that recent changes will increase the permitted risk-based capital controls for U.S. life insurers by less than 2%. However, the NAIC added that a relatively small number of insurers will have a major impact in recalculating their 2019 RBC accounts to reflect the new RBC structure.

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These recent changes have affected most US insurers (life, property, casualty, and health insurers) to some extent, so it is important to understand how investment risk affects the overall regulatory balance of US-based insurers’ RBCs. The rule of thumb we use is that life insurance companies cover about two-thirds of the total risk associated with their investment properties, while property and health and health insurance companies cover about one-third. Given the nature of insurance companies’ liability, these recommendations seem reasonable, but let’s take a closer look at them. Based on RBC’s final report for 2020, we see capital, interest and market risks comprising approximately 66% of total risk for life insurance companies, 39% for life and insurance, and 15% for health insurance companies (Figure 1). 2).

Given life insurer RBC’s significant capital exposure, any change in the cost of capital will clearly affect insurers in this channel.

With this in mind, what should American insurers look for? How have the relative prices of asset classes in general and fixed income investments in particular changed as a result of recent NAIC changes?


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