Weather the Storm

Insurance markets in Asia Pacific are going through an era of rapid change in their regulatory solvency regimes, albeit at a different pace across the region. In the past few years, markets including Australia, Chinese Mainland and Singapore have transitioned into a new solvency regime which is akin to Solvency II. Other markets including Hong Kong SAR, Japan, Korea, Malaysia, New Zealand and Thailand are embarking on their journey to a new solvency regime.

Despite the different levels of progress, these regulatory changes all have a far-reaching impact on the level of capital held by the insurance industry and is a topic of focus by a myriad of stakeholders including regulators, investors, credit rating agencies and the general public.

This evolution of regulatory solvency regime has resulted in a number of key themes:

1. More volatile solvency results. The new solvency standards being adopted will produce more volatile solvency results relative to the existing regimes given the economic balance sheet approach.
2. Essential to be "business-ready" for the new regimes. The increased level of solvency volatility implies that solvency reporting is no longer a compliance exercise. Insurers will need to be "business-ready" for the new regimes, by fully embedding solvency-related metrics in all business processes and having the ability to react to the key underlying drivers of solvency to enable timely business decision-making.
3. Operationalisation requires top-down support. To be "business-ready", operationalisation of the new regime will require top-down management support to drive enterprise-wide business embedding and applications.

Weather the Storm: The Latest Insurance Solvency Capital Updates across Asia Pacific is a series with two volumes which focus on:

Volume 1: Market Updates on Insurance Solvency Capital Developments

Insurance markets in Asia Pacific are going through an era of rapid change in their regulatory solvency regimes, albeit at a different pace across the region. In the past few years, markets including Australia, Chinese Mainland and Singapore have transitioned into a new solvency regime which is akin to Solvency II. Other markets including Hong Kong SAR, Japan, Korea, Malaysia, New Zealand and Thailand are embarking on their journey to a new solvency regime.

Despite the different levels of progress, these regulatory changes all have a far-reaching impact on the level of capital held by the insurance industry and is a topic of focus by a myriad of stakeholders including regulators, investors, credit rating agencies and the general public.

In Volume 1 of this series, we provided an update on the solvency regime developments in each of the insurance markets in Asia Pacific and Deloitte's observations on the market trends under formation.

Volume 2: Are You Business-Ready for the New Solvency Regime?

This volume focuses on two topics:

1. Operationalisation of a new solvency regime - concentrating on the operational challenges brought by the new solvency regime and solutions to these challenges. 
2. Internal Capital Adequacy Assessment Process ("ICAAP") developments in Australia - outlines the developments in the Australian insurance market in response to ICAAP (akin to Own Risk and Solvency Assessment or ORSA under other regimes) and the key success factors for the implementation of enterprise risk management.