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Business and Economics > Insurance

You are looking at 1 - 10 of 31 items for :

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Cover IMF Working Papers
Implementing Risk-Based Solvency for Insurers—Lessons from Kenya, Mexico, and South Africa
Peter Windsor
,
Suzette J Vogelsang
,
Christiaan Henning
,
Kerwin Martin
,
Elias Omondi
,
Gerardo Rubio
, and
Jooste Steynberg
International standards and best practice supports the implementation of a risk-based solvency regime in the regulation and supervision of insurers. Several emerging market and developing economies are transitioning to such a solvency regime or planning to do so. This paper discusses Kenya, Mexico, and South Africa’s journey to putting in place a risk-based solvency regime which had several common elements notwithstanding significantly different insurance sectors. The transition was a multi-year project requiring dedicated additional resources; restructuring of the regulator, including redesigning supervisory processes and tools and upgrading information technology systems; and significantly greater coordination between the regulator and the insurance industry.
Keywords:
Insurance; Risk-based Solvency; Risk-based supervision; solvency regime; Penetration rate; RBS project; solvency assessment; RBS implementation; supervision of insurer; Insurance companies; Solvency; Financial statements; Africa; Global
Cover Global Financial Stability Notes
Private Equity and Life Insurers
Fabio Cortes
,
Mohamed Diaby
, and
Peter Windsor
This Global Financial Stability Note studies the growing trend of private equity (PE) investments into the life insurance industry. PE companies’ investments in life insurers are integral to their strategic growth as PE firms evolve beyond the traditional leveraged buyout transaction to acquire diverse businesses across private credit, structured credit, private real estate funds, and private infrastructure funds. This note reviews the growth in PE investments through the lens of the diverse acquisition incentives and strategies, the consequent changes to asset allocation and investment strategies of the acquired life businesses, and potential prudential and policy implications.
Keywords:
private equity; life insurance; leveraged buyout transaction; private credit; structured credit; private real estate funds; private infrastructure funds; life insurer; private equity company; life insurance insurance company; PE company; IMF Library; Global Financial stability note; Insurance companies; Insurance; Credit; Financial statements; Asset allocation; Global
Cover IMF Staff Country Reports
United States: Financial Sector Assessment Program-Technical Note-Insurance Supervision and Regulation
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note (TN) is a targeted review of cross-cutting themes building on the detailed assessment of the Insurance Core Principles (ICPs) conducted in 2015. The targeted review was chosen, in part, due to the performance of the U.S. insurance regulatory system in the 2015 detailed assessment where it was assessed that the U.S. observed 8 ICPs, largely observed 13 ICPs and partly observed 5 ICPs. The analysis relied on a targeted self-assessment against a subset of ICPs covering valuation and solvency, risk management, conduct, winding-up, corporate governance and enforcement, and the objectives, powers and responsibility of supervisors. The choice of subjects covered in this review is based on those aspects most significant to financial stability and a follow-up on key recommendations from the 2015 detailed assessment. The focus of the analysis has been on the state-based system of regulation and supervision, reflecting the existing institutional setup.
Keywords:
ISCR; CR; insurance regulator; holding company; life insurance; risk management; balance sheet; financial condition; State insurance act; state insurance department; State insurance regulator; State regulator; federal government; Insurance companies; Insurance; Natural disasters; Financial statements; Solvency; Global
Cover IMF Working Papers
Accounting Standards and Insurer Solvency Assessment
Peter Windsor
,
Jeffery Yong
, and
Michelle Chong-Tai Bell
The paper explores the use of accounting standards for insurer solvency assessment in the context of the implementation of IFRS 17. The paper is based on the results of a survey of 20 insurance supervisors. Overall, IFRS 17 is a welcome development but there will be challenges of implementation. Not many insurance supervisors currently intend to use IFRS 17 as a basis for solvency assessment of insurers. Perceived shortcomings can be overcome by supervisors providing clear specifications where the principles-based standard allows a range of approaches. Accounting standards can provide a ready-made valuation framework for supervisors developing new solvency frameworks.
Keywords:
WP; insurance contract; insurance supervisor; impact study; insurance liability; measurement approach; solvency position; Insurers; Supervisors; IFRS; IFRS 17; Solvency; Capital; Supervision; accounting practice; International Financial Reporting Standards; Insurance companies; Accounting standards; Insurance; Global; Africa
Cover IMF Staff Country Reports
Thailand: Financial Sector Assessment Program-Detailed Assessment of Observance-Insurance Core Principles
International Monetary Fund. Monetary and Capital Markets Department
This Detailed Assessment of Observance on Insurance Core Principles on Thailand discusses that the government of Thailand has made a concerted effort to develop the insurance sector. The government has implemented a series of insurance development plans toward this end. Some significant regulatory and supervisory challenges remain, however, if Thailand is to continue to meet the pressures of a changing market and to continue to build the trust on which future growth depends. Consideration should be given to vesting more supervisory authority for key supervisory decisions with the Commission rather than with the Minister and Cabinet. Vesting authority with the Commission will help to ensure that the insurance supervisor has adequate powers to meet the objectives of insurance supervision. With respect to winding up and exit from the market, the insurance legislation should be amended to clearly establish a point at which it is no longer permissible for a troubled insurer to continue in business.
Keywords:
ISCR; CR; risk management; state enterprise; corporate governance; insurance coverage; steering committee; board of directors; interest rate; risk assessment; credit risk; senior management; limited company; risk capital; independent auditor; cash flow; preference shares; Insurance companies; Insurance; Internal controls; Capital adequacy requirements; Auditing; Global
Cover IMF Staff Country Reports
France: Financial System Stability Assessment
International Monetary Fund. Monetary and Capital Markets Department
This Financial System Stability Assessment paper on France provides summary of an assessment of the financial system. Dominated by internationally active financial conglomerates, the French financial system has made important progress since the last financial stability assessment program (FSAP). In order to address a build-up of systemic risks, the authorities have proactively used macroprudential measures and public communication. The government is pursuing a strategy to prepare Paris as a key financial hub, including by promoting crypto-assets, fintech, green finance, and market entry. Banking and insurance business lines, and the corporate sector, carry important financial vulnerabilities that need close attention. The FSAP thus has recommended augmenting policy tools to contain vulnerabilities and continue to act pre-emptively if systemic risks intensify. In order to mitigate intensification of corporate—and potentially household—vulnerabilities, the FSAP proposed: active engagement with the European Central Bank on the possible use of bank-specific measures; considering fiscal measures to incentivize corporates to finance through equity rather than debt; and a sectoral systemic risk buffer.
Keywords:
ISCR; CR; asset; return on equity; bank; financial system; U.S. dollar; debt service; real GDP; monetary policy; banking sector; asset quality; Insurance companies; Insurance; Stress testing; Financial statements; Liquidity requirements; Global
Cover IMF Staff Country Reports
Eastern Caribbean Currency Union: 2018 Discussion on Common Policies of Member Countries-Press Release; Staff Report; and Statement by the Executive Director for the Eastern Caribbean Currency Union
International Monetary Fund. Western Hemisphere Dept.
This 2018 discussion on common policies of the Eastern Caribbean Currency Union (ECCU) highlights that the member countries are gradually recovering following the catastrophic impact of Hurricanes Irma and Maria in 2017. Conditions remain favorable to growth, however, risks are increasing. The fiscal balance for the region as a whole worsened in 2017, reflecting lower inflows from citizenship-by-investment programs and higher reconstruction and current spending. The IMF team made several policy recommendations including shifting focus from the current emphasis on recovery from natural disasters to building ex-ante resilience. The report also recommends intensifying decisive and timely actions to resolve weaknesses in the financial sector, including longstanding problems in the banking sector and emerging risks in the non-banking sector. The authorities expressed commitment to the acceleration of key reforms to upgrade and strengthen the financial sector regional oversight framework. In addition to fiscal consolidation, injecting new vigor into the structural policy agenda will help enhance competitiveness and make growth more inclusive.
Keywords:
ISCR; CR; ECCU country; ECCU price aggregate; Cartac; ECCU debt target; ECCU authority; ECCU region; ECCU work program; ECCU aggregate; Natural disasters; Insurance; Nonperforming loans; Credit bureaus; Caribbean; Global; staff advice; IMF's transparency policy; IMF's article
Cover IMF Staff Country Reports
New Zealand: Financial Sector Assessment Program: Detailed Assessment of Observance-Insurance Core Principles
International Monetary Fund. Monetary and Capital Markets Department
This paper presents an assessment of the Observance of Insurance Core Principles in New Zealand. Observance of these principles in New Zealand falls significantly short. In some areas, the implementation of initiatives that would improve observance is incomplete. Supervisory risk assessment and enhancement of regulatory reporting by insurers are limited, which compromises effective off-site supervision, macroprudential analysis, and publication of aggregate information on the market. The Reserve Bank of New Zealand should focus in regulation and supervisory work on setting standards on corporate governance, risk management, and internal controls. It should assess risk in these areas to promote the effectiveness of insurers’ governance.
Keywords:
ISCR; CR; life insurer; risk management; life insurance; solvency standard; insurance sector; insurance broker; Insurance companies; Insurance; Solvency; Anti-money laundering and combating the financing of terrorism (AML/CFT); Financial statements; Australia and New Zealand
Cover IMF Staff Country Reports
Germany: Financial Sector Assessment Program-Insurance Sector Supervision-Technical Notes
International Monetary Fund. Monetary and Capital Markets Department
This paper provides an update on the German insurance sector and an analysis of certain key aspects of the regulatory and supervisory regime. It includes an analysis of German practice in relation to selected Insurance Core Principles in the context of a wider discussion of key issues in regulation and supervision. This technical note focuses mainly on recent developments in the sector and key vulnerabilities, including life insurance issues, those vulnerabilities associated with the continuing low interest rate environment; the preparations of the authorities and industry for the implementation of the Solvency II requirements; and the supervisory approach to large insurance groups.
Keywords:
ISCR; CR; Solvency II; insurance group; approach to group supervision; fixed income; parent company; supervisory view; ZZR requirement; Solvency II implementation; company level; business organization; reinsurance company; Solvency II requirement; companies' position; Solvency II SCR; a number of company; risk assessment; Insurance companies; Solvency; Insurance; Accounting standards; Global systemically important insurers; Global
Cover IMF Staff Country Reports
Bosnia and Herzegovina: Financial Sector Assessment Program - Insurance Sector—Technical Note
International Monetary Fund. Monetary and Capital Markets Department
This Technical Note discusses key findings and recommendations of the assessment on the Insurance Sector for Bosnia and Herzegovina (BiH). It is observed that 10 insurance companies, accounting for 40 percent of the nonlife market, have low solvency margins and may require supervisory action in the near future. Motor Third Party Liability insurance remains under pressure as market participants are not always compliant with the statutory tariff. It is expected that the Insurance Agency of Bosnia and Herzegovina will enhance the harmonization of entity-level regulations within BiH as well as with the European Union insurance directives.
Keywords:
ISCR; CR; insurance premium; holding company; life insurance; line of business; joint stock; terms and conditions; liability insurance; unearned premium; life insurer; nonlife insurer; RS-ISA resource; nonlife insurance product; Standard and Poor's; business plan; Insurance companies; Insurance; Internal audit; Auditing; Solvency; Global