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Insurers, Society & Regulation: Paul Traynor, BNY Mellon

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Charles Taylor is the Chief Operating Officer and a founding Director of the International Centre for Financial Regulation. His focus is on regulation of non-financial corporates, regulation and governance in emerging markets, financial reporting and the role of technology in governance, risk, and compliance. Charles has extensive knowledge of technology for the financial services market and has also developed businesses in Asia and USA.

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Insurers, Society & Regulation: Paul Traynor, BNY Mellon

  1. 1. INSURERS, SOCIETY AND REGULATION Asia House Signature Conference, 19 September 2012Paul Traynor, Head of Insurance EMEA, BNY Mellon
  2. 2. The Insurance Industry doesn’t have a Basel III… IAIS Reg Capital IAIS Reg Capital Member? Regime? Member? Regime? ? ?Brunei Darussalam Myanmar ? Fixed Ratio Cambodia Philippines Risk Based Risk Based Indonesia Singapore ? Risk Based Laos Thailand Risk Based Fixed Ratio Malaysia Vietnam 2
  3. 3. …but one size doesn’t fit all GDP (pc) Life Non-life Sum Life Non-life Sum PPP$ D($) P(%) D($) P(%) D($) P(%) D($) P(%) D($) P(%) D($) P(%) 4,666 40 1.1 20 0.6 60 1.7 ASEAN 80 2.0 41 1.0 122 3.0 Indonesia 16,186 328 3.3 175 1.8 502 5.1 World 378 3.8 283 2.8 661 6.6 Malaysia 4,214 20 0.8 10 0.4 30 1.3 World 2,168 5.0 1,543 3.6 3,712 8.6 Advanced Philippines 59,711 2,296 4.3 810 1.5 3,106 5.9 World 61 1.4 56 1.3 118 2.7 EmergingSingapore Density – Premiums per capita 9,396 134 2.7 88 1.7 222 4.4 Penetration – Premiums as a % of GDP Thailand Source: Swiss Re, World insurance in 2011 3,549 9 0.7 12 0.9 21 1.5 Vietnam3
  4. 4. …especially in fast moving Asia… The LIMRA Market Maturity (Distribution) Model Phase I II III IV 300 years 150 years 125 years Vietnam China Malaysia Singapore UK, US, Australia 15 years Emerging Developed Tied Agents Multi-channel New to all channels – Supermarkets, phones Multi-product4
  5. 5. …where the on-going search for talent is being experiencedmost acutely… …in Asia 70% of respondents to the Lloyd’s of London Risk Index survey rated this risk as a high or very-high priority for their businesses.5
  6. 6. The insurance industry has a lot to offer… • In 2011 • The US suffered economic losses of $25 billion as a result of Natural Catastrophes. $17 billion of the loss was insured against • $12.5 billion of the estimated $17 billion of economic losses caused by the Christchurch earthquake was absorbed by the global reinsurance industry • $3.5 billion of Australias estimated $8 billion of losses were taken by the global re-insurers • The economic losses blamed on the Thai floods has been estimated by the World Bank to be $45 billion (7% of GDP), $4 billion of this was insured Sources: Lloyd’s of London, the World Bank6
  7. 7. “The welfare state is flowering in Asia. Will it free the continentfrom squalor? Or sink it in debt?”7
  8. 8. Policyholder protection must be balanced againstsocioeconomic goals…Which products do you think will be most negatively affected by Solvency II? Select up to two. Life insurance Annuities Other Long term guarantees Catastrophe Personal lines insurance under pressure insurance Commercial insurance Commercial insurance Catastrophe insurance Personal lines Annuities insurance Life insurance Other Insurers will have a reduced / increased appetite for which of the following assets? 0.0%20.0%40.0%60.0%80.0% Insurers expected to further de-risk their asset allocations8
  9. 9. …as must the amount versus the effectiveness of newregulationDistribution & Consumer European Global UK Retail InvestorProtection Retail Distribution Distribution Compensation DistributionProduct & Infrastructure Outcome Convergence Money Pension T2S & MarketDevelopment Funds Oriented of Restructuring Infrastructure Products AlternativesGovernance & Fund Corporate AIFMD Depositaries UCITS IV & VOperations GovernanceResilience & Stability in Basel III / Crisis Credit Rating IFRS & GAAP Solvency II CRD IV Management Agencies ConvergenceMarketsEfficiency, Integrity, Derivatives Securities Short SellingLiquidity & Commodity Market MiFID Taxation Market Law & CDSsTransparency, Markets Abuse Review Infrastructure Directive Margin HumanFinancial & Business Mgmt Erosion Resources New regulatory bodies , ESFS, ESMA, EBA, EIOPA,9
  10. 10. “Simplicity is not a simple thing”, Charlie Chaplin10

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