insurers, society & regulation: paul traynor, bny mellon
Post on 21-Oct-2014
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Charles Taylor is the Chief Operating Officer and a founding Director of the International Centre for Financial Regulation. His focus is on regulation of non-financial corporates, regulation and governance in emerging markets, financial reporting and the role of technology in governance, risk, and compliance. Charles has extensive knowledge of technology for the financial services market and has also developed businesses in Asia and USA.TRANSCRIPT
INSURERS, SOCIETY AND REGULATION
Asia House Signature Conference, 19 September 2012
Paul Traynor, Head of Insurance EMEA, BNY Mellon
Brunei Darussalam
Cambodia
Indonesia
Laos
Malaysia
Philippines
Singapore
Thailand
Vietnam
Myanmar
The Insurance Industry doesn’t have a Basel III…IAIS
Member?Reg Capital
Regime?IAIS
Member?Reg Capital
Regime?
?
?
?
Risk Based
?
Fixed Ratio
Risk Based
Risk Based
Risk Based
Fixed Ratio
2
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
…but one size doesn’t fit all Life
3
Non-life Sum
ASEAN
World
World Advanced
World Emerging
D($) P(%)Life Non-life Sum
D($) P(%) D($) P(%) D($) P(%) D($) P(%) D($) P(%)
4,666 40 1.1 20 0.6 60 1.7
16,186 328 3.3 175 1.8 502 5.1
4,214 20 0.8 10 0.4 30 1.3
59,711 2,296 4.3 810 1.5 3,106 5.9
9,396 134 2.7 88 1.7 222 4.4
3,549 9 0.7 12 0.9 21 1.5
80 2.0 41 1.0 122 3.0
378 3.8 283 2.8 661 6.6
2,168 5.0 1,543 3.6 3,712 8.6
61 1.4 56 1.3 118 2.7
Density – Premiums per capitaPenetration – Premiums as a % of GDPSource: Swiss Re, World insurance in 2011
GDP (pc)PPP$
…especially in fast moving Asia…
The LIMRA Market Maturity (Distribution) Model
Phase I II III IV
Emerging Developed
Tied Agents
Multi-channel
Multi-product
Vietnam China Malaysia Singapore UK, US, Australia
300 years 125 years150 years
15 years
New to all channels – Supermarkets, phones
4
…where the on-going search for talent is being experienced most acutely…
…in Asia 70% of respondents to the Lloyd’s of London Risk Index survey rated this risk as a high or very-high priority for their businesses.
5
The insurance industry has a lot to offer…
• In 2011• The US suffered economic losses of
$25 billion as a result of Natural Catastrophes. $17 billion of the loss was insured against
• $12.5 billion of the estimated $17 billion of economic losses caused by the Christchurch earthquake was absorbed by the global reinsurance industry
• $3.5 billion of Australia's estimated $8 billion of losses were taken by the global re-insurers
• The economic losses blamed on the Thai floods has been estimated by the World Bank to be $45 billion (7% of GDP), $4 billion of this was insured
Sources: Lloyd’s of London, the World Bank
6
“The welfare state is flowering in Asia. Will it free the continent from squalor? Or sink it in debt?”
7
8
Other
Personal lines insurance
Commercial insurance
Catastrophe insurance
Annuities
Life insurance
0.0%
20.0
%40
.0%
60.0
%80
.0%
Other
Personal lines insurance
Commercial insurance
Catastrophe insurance
Annuities
Life insurance
Which products do you think will be most negatively affected by Solvency II? Select up to two.
Insurers will have a reduced / increased appetite for which of the following assets?
Insurers expected to further de-risk their asset allocations
Long term guarantees under pressure
Policyholder protection must be balanced against socioeconomic goals…
Distribution & Consumer Protection
Product & Infrastructure Development
Governance & Fund Operations
Resilience & Stability in Markets
Efficiency, Integrity, Liquidity & Transparency,
Financial & Business Mgmt
New regulatory bodies , ESFS, ESMA, EBA, EIOPA,
GlobalDistribution
Basel III / CRD IV
European Retail
Distribution
UK Retail Distribution
Solvency II
MiFIDReview
AIFMD Depositaries
IFRS & GAAP Convergence
TaxationDerivatives
Market Infrastructure
Human Resources
Crisis Management
Margin Erosion
UCITS IV & V
T2S & Market Infrastructure
Money Funds
Outcome Oriented Products
Convergence of
Alternatives
PensionRestructuring
Investor Compensation
Securities Law
Directive
Credit Rating Agencies
Market Abuse
Short Selling & CDSs
Commodity Markets
Corporate Governance
9
…as must the amount versus the effectiveness of new regulation
10
“Simplicity is not a simple thing”, Charlie Chaplin