Insurance Practices and Risk Control: Issues and Lessons for Property and Liability Insurers

This article presents a comprehensive theoretical framework for property and liability insurance risk management and control mechanisms. It presents the rationale behind property and liability insurance’s risk control measures. Further the article tries to describe and examine four main categories of property and liability insurance risk management and mitigation strategies / techniques, viz; maintaining the internal capital base, managing the asset risk exposure, managing by underwriting risks, and managing the covariance between asset and liability returns. The securitization of bad assets is specifically projected as a potential method for managing and underwriting risks. Finally, the article ends up with an outline of four key guidelines for the cost-effective and efficient risk management practices in the insurance sector

Flotsam, Financing and Flotation: Is Canada “Resolution Ready” for Insurance Company Insolvency?

Insurance represents almost 2 per cent of Canada’s gross domestic product (GDP), yet there is little public policy discussion regarding the viability of the companies that insure Canadians or about the policyholder protection and resolution regime that underpins the provision of these services. As new products and technology develop, and as the complexity of multinational insurance enterprises increases, new risks pose challenges for Canada’s oversight and policyholder protection regimes. This article provides an overview of the insolvency regime for insurers in Canada, focusing primarily on the federal regime as the exemplar of how Canadian regulators and the insurance industry have built mechanisms for early intervention. It examines the causes of financial distress and the kinds of asset values that may be identified and preserved during insolvency. It explores the regulatory capital requirements imposed on insurers with the goal of safety and soundness of the system. It then examines policyholder protection and insolvency resolution strategies, including the early intervention system, aimed at keeping companies afloat or enabling them to exit the market with as little disruption as possible. It analyses how Canada’s supervisory and resolution system measures up against international standards, and looks at aspects of the system that need improvement and suggests priorities for legislative reform, including clear assignment of responsibility for resolution, treatment of derivatives and provisions to facilitate cross-border proceedings. The article also highlights new complex challenges facing Canadian insurers in terms of solvency risk, including accounting standards changes, climate change risk and cybersecurity

Essays on Improving the Regulation and Supervision of Insurance in PR China

PhDThis thesis consists of six chapters dealing with several issues related to the common theme of improving the insurance regulation and supervision in China based on China's realities and experience drawn from some selected regimes. Chapter I provides an overview of China! s insurance industry and its regulatory framework with an aim at providing a platform for deeper discussions in the following chapters. In particular, it reviews the 2002 revision of PRC Insurance Law. Chapter 2 critically examines the liberalisation process, competition issues and relevant legal framework in China's insurance sector in the context of the WTO accession and the international convergence of regulatory standards and practices. Chapter 3 examines how China's insurance regulation and supervision can be effectively and efficiently improved by the implementation of market-based approaches, shifling some of responsibilities for supervision onto insurance firms and the insurance industry through greater corporate governance, active self-rcgulation by the industry, and reinforced insurers' transparency. Chapter 4 addresses issues on the restructuring of China's insurance prudential regulation and supervision from four sides: the inefficiency of solvency management existing in the insurance industry, the framework of prudential regulation, the upgrade of early warning system, and the need to establish policyholder protection funds. Chapter 5 demonstrates the urgent needs for both relaxing restrictions on insurers' investment and improving investment regulation, and discusses a set of regulatory measures that would both facilitate insurers' effective portfolio management and safeguard the soundness of the insurance sector. Chapter 6 examines rate regulation and impacts of rate deregulation in China's nonlife insurance markets, focusing on auto insurance as a typical case. By drawing experience from the rate regulation in the US property and casualty insurance, it shows that China needs certain legal environment to escort a gradual liberalisation of rate control