CEOs See Little Reg Impact From Credit Crisis

Regulatory consequences of the credit crisis will be minor for insurers, executives surveyed by an international research organization said recently.

Of 40 industry leaders from global insurers and reinsurers polled during the 35th General Assembly of The Geneva Association in Bermuda in May, 87 percent said they expect only a “minor tightening” of insurance regulatory frameworks.

Any regulatory changes will be the result of “spill-over” from expected major changes to banking regulation, these chief executive officers said.

Still, in a second part of the survey, the chief executive officers listed the risk of insurance regulators overreacting to the credit crisis among the top three risks for the industry in the next 12 months.

The top two concerns identified were an economic slowdown resulting from the credit crisis and continuing financial market volatility.

All the CEOs surveyed said they believed insurers would suffer little or no reputation damage as a result of the credit crisis–52 percent of survey respondents foresee minor damage and the other 48 percent expect no damage.

Fifty-two percent also do not expect any greater or fewer securitizations of insurance risks (such as catastrophe bonds) as a result of the credit crisis, while 28 percent expect accelerated activity. The remaining 20 percent believe the impact will be a slowdown in the pace of convergence between the insurance and capital markets.

On other matters, 57 percent of the CEOs favor accelerating the pace of change in solvency regulation, and two-thirds said they were satisfied with the direction of Solvency II, the modernization of European solvency regulation set for 2012 implementation.

With respect to efforts to develop international accounting standards, however, the same proportion–two-thirds–said they are unsatisfied or very unsatisfied with the direction of International Financial Reporting Standards.

The Geneva Association, a nonprofit organization that acts as a research forum for top insurance CEOs to exchange ideas and identify key strategic issues, said the meeting in Bermuda was sponsored by XL, ACE, Partner Re and Axis. In addition, the group said that other participating CEOs include leaders of global firms such as AIG, Lloyd's and Swiss Re, as well as leaders of regional firms in Brazil, Poland and Turkey.