Compliance to regulations at top of insurers’ agenda

With Asian insurance regulators putting forth a series of pre-emptive reforms to tighten the management of insurers, carriers are demonstrating proactive risk stewardship and strengthening their ability to comply with higher prudential standards, says IDC Financial Insight, a research and consulting firm.

A recent survey by the US-headquartered firm, shows that insurers rank ensuring compliance with new regulatory and accounting frameworks and international best practices ahead of other risk management techniques such as risk training for internal executives. The April 2011 regional survey asked Asian insurers about the risk mitigation techniques that their organisations will be focusing on in the next 12 months. To better evaluate and mitigate risk for risk regulatory compliance, the firm observes that insurers are channeling more resources into technologies. These include tackling issues aro

und their respective countries’ regulatory mandates, determining if they should prepare for international mandates like Solvency II and best practices from International Financial Reporting Standards (IFRS), and, developing risk-based performance matrices that are reflective of the long-tenured risk profile of insurance policies.

Chew Li May, Associate Research Director at IDC Financial Insights Asia Pacific, says: “Our international markets have grown increasingly entwined and riskier by the year, and insurers, being in the business of risk aversion, understand the need to astutely manage their personal risk profile. There is also increased pressure from internal and external stakeholders for management to demonstrate better awareness, oversight, and controls around risk.”

Numerous potential business benefits can be derived from getting one’s risk management house in order. For instance, up-to-date and secure systems would minimise the risks of security breaches and fraudulent activities from occurring, says IDC Financial Insight.