Kathmandu. The International Association of Insurance Supervisors (IAIS) has released an important report on the new structural changes that have emerged in the life insurance sector and the risks they may bring. <\/p>\n
The report, prepared for insurance regulators around the world, stresses the need to closely monitor alternative investments and cross-border reinsurance practices, especially by insurance companies. Key points of the report: <\/p>\n
}<\/p>\n
Life insurance companies around the world are now moving beyond traditional government bonds or stock markets to invest in alternative assets such as private equity, real estate, infrastructure projects and private debt. The association considers such investments to be risky on three grounds. <\/p>\n
The market value of such assets is difficult to determine immediately, such investments cannot be converted into cash immediately in times of crisis, and complexity: the terms and structure of such investments are much more complex than those of ordinary investments. <\/p>\n
Life insurance companies have increasingly increased their reliance on asset-intensive reinsurance to reduce their liabilities and capital burden. This involves shifting large liabilities such as pensions and annuities, in particular, to foreign reinsurance companies. <\/p>\n
In case of bankruptcy of the reinsurance company: If the foreign reinsurance company fails, all of that liability goes back to the parent insurance company. That could sink the company. <\/p>\n
Regulatory loopholes: There is a risk of evading the rules of capital adequacy by taking advantage of the laws of different countries. <\/p>\n
According to the association, a major financial crisis does not appear to be happening anytime soon, but the risk concentrated on certain insurance companies could stir up the market. Jonathan Dixon, general secretary of the association, said: “Our main objective is to ensure that insurers are able to withstand any financial shocks. <\/p>\n
}<\/p>\n
Nepal’s insurance sector is also gradually moving towards modernization. Although Nepal has not yet made major investments in such complex international reinsurance and private equity, these global practices could have an impact on the changes that the Nepal Insurance Authority makes to its investment guidelines. <\/p>\n
The association will now closely monitor the investment data of insurance companies, speed up information exchange between regulators in different countries, and issue new guidelines for complex reinsurance contracts. <\/p>\n
This report emphasizes with priority that insurance companies should not compromise on the safety of the insured while adopting complex investments and reinsurance mechanisms in the greed of making more profits.<\/p>\n","protected":false},"excerpt":{"rendered":"
Kathmandu. The International Association of Insurance Supervisors (IAIS) has released an important report on the new structural changes that have emerged in the life insurance sector and the risks they may bring. The report, prepared for insurance regulators around the world, stresses the need to closely monitor alternative investments and cross-border reinsurance practices, especially by […]<\/p>\n","protected":false},"author":5,"featured_media":267517,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[45031,45067,45159,45099],"tags":[],"class_list":["post-283314","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banner-news-en","category-important-en","category-news-en","category-regulatory-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/283314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/comments?post=283314"}],"version-history":[{"count":1,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/283314\/revisions"}],"predecessor-version":[{"id":283315,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/posts\/283314\/revisions\/283315"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media\/267517"}],"wp:attachment":[{"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/media?parent=283314"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/categories?post=283314"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/english.insurancekhabar.com\/ikbrapi\/wp\/v2\/tags?post=283314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}