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Evaluation of Impacts and Challenges arising from Current Regulatory and Reporting Reforms

English title Evaluation of Impacts and Challenges arising from Current Regulatory and Reporting Reforms
Applicant Wagner Joël
Number 137781
Funding scheme Project funding (Div. I-III)
Research institution Institut für Versicherungswirtschaft Universität St. Gallen
Institution of higher education University of St.Gallen - SG
Main discipline Science of management
Start/End 01.11.2011 - 30.04.2013
Approved amount 79'326.00
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Keywords (3)

reporting; insurance; regulation

Lay Summary (English)

Lead
Lay summary

In the European insurance industry, regulatory and reporting frameworks are currently subject to farreaching reforms. The Swiss Solvency Test, a new solvency requirement in Switzerland, is already in force. The new European solvency framework, Solvency II, will presumably be implemented by end 2012 (European Union, 2009). On the part of reporting, the Market Consistent Embedded Value (MCEV) Principles (CFO Forum, 2009b) were published in June 2008 and are expected to be implemented from 31 December 2011 on. An exposure draft on IFRS 4 Phase II, a new reporting standard defining how to recognize, measure, and disclose insurance contracts, was published in July 2010 (IASB, 2010a). Finally, in a White Paper on insurance guaranty systems, the European Commission (2010) proposes that a directive should be introduced which ensures that all Member States of the European Union have an insurance guaranty system in place that meets certain minimum requirements.

We analyze these regulatory frameworks in the details, put them into relation to each other, analyze costs and benefits, and estimate their economic impact. To achieve this, we plan to write, present, and publish two papers related to these new regulatory frameworks. Both papers extend existing literature and have essential practical implications for insurers, regulators, as well as investors.

Paper 1 takes a broad view and compares new regulatory and reporting frameworks. Different takeholders’ perspectives are analyzed in order to assess the economic impact of the regulatory concepts. The paper has a special emphasis on the relation between the different frameworks which is of particular relevance due to various interrelations and interactions.

Paper 2 builds on paper 1 and aims at estimating the actual costs (direct and indirect) of each single new regulatory and reporting framework. This will help insurance companies
to prepare for the introduction of these concepts.

Given the substantial scale of the new regulatory and reporting frameworks, this research project is of high relevance to insurers, regulatory, investors, and policyholders.

Direct link to Lay Summary Last update: 21.02.2013

Responsible applicant and co-applicants

Employees

Name Institute

Publications

Publication
Comparison of Stakeholder Perspectives on Current Regulatory and Reporting Reforms
Wagner Joël, Zemp Alexandra (2012), Comparison of Stakeholder Perspectives on Current Regulatory and Reporting Reforms, in Risk Management and Insurance Review, 15(2), 225-254.
Evaluation of Benefits and Costs of Insurance Regulation - A Conceptual Model for Solvency II
Lorson Jonas, Schmeiser Hato, Wagner Joël, Evaluation of Benefits and Costs of Insurance Regulation - A Conceptual Model for Solvency II, in Journal of Insurance Regulation, 0.
New Solvency Regulation: What CEOs of Insurance Companies Think
Kreutzer Markus, Wagner Joël, New Solvency Regulation: What CEOs of Insurance Companies Think, in The Geneva Papers on Risk and Insurance – Issues and Practice, 0.
What Drives Insurers' Demand for Cat Bond Investments? Evidence from a Pan-European Survey
Braun Alexander, Müller Katja, Schmeiser Hato, What Drives Insurers' Demand for Cat Bond Investments? Evidence from a Pan-European Survey, in The Geneva Papers on Risk and Insurance – Issues and Practice, 0.

Scientific events

Active participation

Title Type of contribution Title of article or contribution Date Place Persons involved
Western Risk and Insurance Association, Annual Meeting (WRIA) 02.01.2013 Las Vegas
39th Seminar of the European Group of Risk and Insurance Economists (EGRIE) 17.09.2012 Palma
16th International Congress on Insurance: Mathematics and Economics (IME) 28.06.2012 Hong Kong
Mathematical and Statistical Methods for Actuarial Sciences and Finance (MAF) 2012 01.04.2012 Venice
Jahrestagung des Deutschen Vereins für Versicherungswissenschaft (DVfVW) 21.03.2012 Hannover
Doktorandenseminar 2012 20.01.2012 Nürnberg
Western Risk and Insurance Association, Annual Meeting (WRIA) 04.01.2012 Kona


Associated projects

Number Title Start Funding scheme
144549 Implicit Constraints, Incentives, and Systemic Risk Imposed by New Standards for Insurance Regulation 01.01.2013 Project funding (Div. I-III)
129901 Regulation in the Financial Services Industry After the Crisis (D-A-CH/LAV) 01.04.2010 Project funding (Div. I-III)

Abstract

In the European insurance industry, regulatory and reporting frameworks are currently subject to farreaching reforms. The Swiss Solvency Test, a new solvency requirement in Switzerland, is already in force. The new European solvency framework, Solvency II, will presumably be implemented by end 2012 (European Union, 2009). On the part of reporting, the Market Consistent Embedded Value (MCEV) Principles (CFO Forum, 2009b) were published in June 2008 and are expected to be implemented from 31 December 2011 on. An exposure draft on IFRS 4 Phase II, a new reporting standard defining how to recognize, measure, and disclose insurance contracts, was published in July 2010 (IASB, 2010a). Finally, in a White Paper on insurance guaranty systems, the European Commission (2010) proposes that a directive should be introduced which ensures that all Member States of the European Union have an insurance guaranty system in place that meets certain minimum requirements.We want to analyze these regulatory frameworks in the details, put them into relation to each other, analyze costs and benefits, and estimate their economic impact. To achieve this, we plan to write, present, and publish two papers related to these new regulatory frameworks. Both papers extend existing literature and have essential practical implications for insurers, regulators, as well as investors. Paper 1 takes a broad view and compares new regulatory and reporting frameworks. Different takeholders’ perspectives are analyzed in order to assess the economic impact of the regulatory concepts. The paper has a special emphasis on the relation between the different frameworks which is of particular relevance due to various interrelations and interactions. Paper 2 builds on paper 1 and aims at estimating the actual costs (direct and indirect) of each single new regulatory and reporting framework. This will help insurance companiesto prepare for the introduction of these concepts.Given the substantial scale of the new regulatory and reporting frameworks, this research project is of high relevance to insurers, regulatory, investors, and policyholders.
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