Insurance Agenda - Capital, risk and regulation - August 2012 - Ernst & Young - Australia

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.