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Insurance Agenda - Capital, risk and regulation - August 2012 - EY - Australia

Capital, risk and regulation

Risk and capital management functions are facing significant challenges. Against a wave of regulatory reform and highly uncertain macro-economic trends, getting the right balance between capital levels, ROE and growth has never been more important.

Although insurers recognise that much of the reforms are needed and will bring positive benefits to consumers and the industry, the cost burden of implementing such reforms are significant.

We can help insurers navigate through such reforms. Improving the way risk based-decisions are made and how capital can be allocated more effectively in order to strengthen risk and capital management capabilities and increase performance in a highly competitive environment are often leveraged from learning’s offshore, notably Solvency II, but critically recognise the nuances of the local market.

In the NSW workers compensation legislation passed by the NSW parliament on 22 June, one key aspect seemingly went under the media’s radar. While the focus has been on the legislative amendments to benefits, the surprise was the amendment that enables the Government to privatise the Scheme by allowing new insurers – without the need to pass further legislation.

Progress in financial risk management
This survey, the third conducted by EY in conjunction with the Institute of International Finance (IIF) and the first to include global insurance firms, highlights how the global regulatory landscape is impacting the banking and insurance industries.

LAGIC Update
We discuss the recent documents APRA have released in regards to the Life and General Insurance Capital (LAGIC) standards and the processes and key issues that management need to be addressing to become LAGIC ready by January 2013.

Australasian Capital Confidence Barometer, April 2012
Corporate confidence in the global outlook is steadily improving, Australian and New Zealand companies boast strong balance sheets and are positioned for growth. Despite this increasing optimism, companies are not yet accelerating acquisition plans and are more focused on organic growth.

Growing Beyond: a place for integrity - 12th Global Fraud Survey
Our 12th Global Fraud Survey suggests that although many companies have intensified their efforts to combat bribery and corruption, much still remains to be done.

The importance of model risk management
In the last few years, the financial environment has highlighted the importance of risk exposure. Consequently, insurers are initiating steps to enhance their model risk management (MRM) practices. Here, we highlight experiences by Nationwide, a leading insurance company, on MRM practices and share key findings.

The impact of FATCA on the insurance industry
FATCA is not just another global change programme. It is the first tax provision to require uniform global change, impacting your customer interaction with a fixed deadline.

While it is important to understand FATCA and its impact, it is critical that the requirements be operationalised to minimise its impact on the business and manage the customer experience. The timeframes before commencement of the rules require insurance companies to start their FATCA programs now.

Limited improvements to IFRS 9 classification and measurement - The impact for insurers and next steps
Now that the IASB has confirmed its intention to consider making limited improvements to the IFRS 9 classification and measurement model, they are working with the FASB to align more closely. What is the impact on your accounting models and when should you being adopting them?

Turn risks and opportunities into results: the top 10 risks and opportunities in light of the current economic environment
After a significant year of political upheaval in the Middle East, unpredictable stock markets, a deepening crisis in the Eurozone and the tsunami in Japan, business executives could be forgiven for wanting a respite from an environment that looks increasingly challenging and uncertain.

This report explores the top risks and top opportunities for businesses in light of the current economic environment.

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    Warrick Gard
    Actuarial Services
    Tel: +61 2 9248 4484

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