New insurance solvency reforms established this October are expected to modernize and bring uniformity to the disparate supervisory frameworks that currently oversee global insurance companies and will mean major step changes to their business models. Although the transition in some jurisdictions may be costly, the likely long-term cost savings to the industry are estimated at between US$15 and $25 billion*, according to a report from KPMG International. KPMG’s report, Evolving Insurance Regulation – on the Move, provides interpretation and insight on the International Association of Insurance Supervisors’ (IAIS) Insurance Core Principles (ICPs), a global framework for the regulation and supervision of the insurance sector. The creation of a new supervisory framework, known as ComFrame (the common framework for internationally active insurance groups (IAIGs)) now under development by the IAIS, will herald a significant new change in the way such insurance groups are supervised. In October, new ICPs – particularly concerning solvency – provided under ComFrame, will drive uniformity and harmonization in the supervision of capital and solvency management among global insurance firms. This is expected to positively impact the entire value chains of insurance regulatory regimes around the world over the next five to 10 years. The change will help refocus new business models based more on products and services and building competitive advantage rather than on the costly administration of operating under multiple regulatory regimes. “While there is a price to implementing the new reforms, the cost of disparate regulations is even higher - posing a detriment to shareholder value, creates competitive distortions and causes inefficiencies,” said Simon Nicholas, Associate Director at KPMG. The regulatory changes set to take place across the industry in the coming years represent an unprecedented and fundamental change in the approach to regulation. The impact will extend beyond mere compliance and will strike at the heart of the business agenda. Ultimately, these reforms could mean a reduction in the overall cost of insurance regulation.” -ENDS-