Over-regulation poses real threat: survey

The threat of over-regulation looms large for global insurance experts, according to results from a Geneva Association survey.
In early April, 46 senior insurance experts and professionals from around the world, including 15 heads of supervisory and regulatory authorities, participated in the PROGRES 2009 Regulatory Questionnaire.
The survey found that:
• 80% of survey respondents believe the regulatory burden for the insurance industry will increase in the future;
• More than 67% believe the global financial turmoil threatens to lead to over-regulation of the insurance industry;
• 71% expect more protectionist behaviour to affect international insurance business;
• 83% agree the insurance industry should be more forceful in public debates on regulatory topics;
• opinion was divided on whether new regulation would lead to a change in the competitive position of insurance vis-à-vis other financial services players;
• 57% expect the future prospects of bancassurance to be negatively impacted by the global financial turmoil; and
• most experts mentioned accounting rules as the foremost area in need of overhaul in terms of requiring stricter regulations.
“The survey results reveal that over-regulation is a real threat scenario for the insurance industry, a concern shared by some regulators and supervisors,” Patrick M. Liedtke, secretary general and managing director of the Geneva Association, said in an association newsletter.
“It was also interesting to note that survey participants chose accounting as the foremost area in need of overhaul, an area that is regarded by some observers as a contributing factor to the financial crisis while others deplore the misalignment between the accounting picture and the economic reality at insurance firms.” Liedtke said the looming revival of protectionist tendencies could negatively impact the global integration and growth of insurance operations.