Trust between insurers, regulators improves but more to be done

The trust sentiment between insurers and regulators has improved significantly, but remains a work in progress, according to Axis Capital Chairman Michael Butt, on the eve of the Geneva Association’s annual General Assembly being held in Singapore.

Speaking to reporters yesterday, he said that following the 2008-09 global financial crisis, The Geneva Association, a leading think tank of the industry, has done lots of work in stating its case that insurers do not present the same type of systemic risk as banks.

“We’ve persuaded the main regulators around the world that the insurance industry is a more stable type of risk than the banking industry. It remains a continuous battle, but I think we are making significant progress.”

Common global regulatory framework

Touching on the work of the International Association of Insurance Supervisors (IAIS) in fostering a common regulatory framework for international insurers, he said such a move could only be effective if adopted globally.

“Global companies are going to find it very difficult if they have to allocate capital to every region in which they operate. Your capital efficiency will be destroyed and your products become more expensive, which is not the purpose.

“So, some form of trust needs to be created between the international players and their regulators that the efficiency of their capital can be properly put to work. Trust has improved but there’s still some way to go.”

He added that on another level, trust between regulators is perhaps even more critical to ensuring an effective global framework.

“The regulators globally have to trust each other for there to be an efficient system.”

The two-day General Assembly starts today, with 60 of the top global insurance CEOs gathering in Singapore to discuss the economic and strategic challenges facing the industry.

This year’s event is hosted jointly by the Monetary Authority of Singapore (MAS) and Asia Capital Re.

Singapore’s Deputy Prime Minister Tharman Shanmugaratnam, will be the keynote speaker at the Assembly, while Prime Minister Lee Hsien Loong will host a function for the delegates at the Istana.