Rob Curtis on Evolving Insurance Regulation 

I’m Rob Curtis, I’m a director of Insurance Risk and I also lead our insurance centres of excellence for risk and regulation across Europe, Middle East and Africa. The global financial crisis has really seen a step change in regulatory activity; in particular new standards are now being applied from this October particularly around capital adequacy, enterprise risk management, investments,

and valuation. And what that means is that we need to provide clients with an insight into what this might mean for internal models, for conducting own risk consultancy assessments, and prudent personal principles for all investments.

What we’re seeing is actually clients coming to us saying, what do these actual new expectations mean from supervisors, and in particular around the college process? And so what you’ll see globally in the next few years is supervisors individually implementing these new requirements within their local jurisdictions. And particularly for groups that’s a big win, because what that means is they

can now transfer their risk and finance programmes globally. Which actually at this stage they can’t quite do because of the individual requirements which are still set at local country level. What clients are wanting is, where is the world going tomorrow, and they need that insight today.

And so particularly the changing environment in the IAIS, the International Association of Insurance Supervisors. That actually is changing the global architecture of regulatory requirements as we speak. We’re creating three centres of excellence around the globe.
 
These three centres around the world are basically going to enable us to offer clients the ability and insight into what really is happening at a global level. Because regulation is no longer just country or European specific, for example, it’s really being broadened out to a global context. And so clients, particularly those who are internationally focused, need to know what’s going on on the ground in those areas. And as the requirements are now becoming more attuned and aligned with some of the Solvency II requirements here in Europe, we can actually provide that insight readily for those clients.  
 
Over the next few years the insurers have to actually report their own risk and solvency assessments, and that’s going to require a combination of reporting on their risk elements, their capital requirements, and how their governance arrangements are actually organised within the firm. And that, for most firms, is a real step change to how they’ll actually try and go about putting together a cohesive statement to their regulators. Now globally that will be extended over time because of the new requirements that will come through in the IAIS.

Without a doubt in the next few years supervisors are really going to be focusing on how firms are integrating their risk and finance pieces. Because we know where the regulations are going, we actually can therefore be of real value to firms in terms of their risk and capital integration pieces, particularly around internal models and their own risk and solvency assessment requirements that they’ll have to submit to supervisors.