Deloitte in December 2017 released three reports discussing potential developments in the insurance industry for 2018 and beyond.

1. 2018 Insurance Industry Outlook – Industry trends, strategies to stay competitive Page with link to report
2. 2018 U.S. Insurance Regulatory Outlook – Forging ahead amid uncertainty Page with link to report
3. IAIS update: 2017 annual meeting – Insurance supervisors focus on risk and regulatory standards Page with link to report

The International Association of Insurance Regulators (IAIS) is pressing ahead with two key projects. The adoption of common Insurance Capital Standards (ICS) would level the playing field between insurers worldwide, and especially between U.S. and E.U.-based firms. Whilst similar in principle, U.S. Risk-Based Capital (RBC) calculations often result in lower capital requirements for life and health insurers than with E.U. Solvency II formulas. In turn, this gives an advantage to U.S. firms, especially when it comes to M&A activities. Unsurprisingly, U.S. regulators did not appear to support any further convergence. The adoption of revised Insurance Core Principles (ICPs) that set standards for regulating insurers worldwide seems to be less controversial. ICPs deal with, for example, reinsurance; intermediaries; and conduct of business.

Medium-term vs. Short-term Impacts

The potential impact of revised ICS and ICPs may not be immediate due to the long negotiation processes, but it is profound. Global guidelines transposed into local regulations have direct practical implications for day-to-day insurance operations.

As to the short-term,  the first two reports above provide high-level summaries of issues to watch and/or to tackle; one last chance to review action plans and budgets for 2018 before the end-of-year recess?