New Challenges for Market Supervisors: Alternative Risk Transfer Mechanisms
The evolving landscape of alternative risk transfer mechanisms in the insurance industry, focusing on tailoring solutions to specific needs, multidimensional coverage, and innovative financial instruments. Discover the importance of effective risk transfer and regulatory vigilance in addressing emerging risks in international supervisory practices.
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Presentation Transcript
New Challenges for Market Supervisors INSURANCE BEYOND INSURANCE The Alternative Risk Transfer mechanisms Stefano De Polis IVASS Secretary General Florence, November 5, 2021
New Challenges for Market Supervisors Alternative risk transfer mechanisms. Possible common elements: tailor made for specific needs of the risk taker; multidimensional coverage: multiannual and/or multi-risk; replace pure risk transfer with risk financing; make it possible to underwrite risk by parties other than (re)insurers; incorporate financial instruments such as derivatives. 2
New Challenges for Market Supervisors In the ART there is always: an alternative counterpart (i.e. self-insurance; reinsurance poll) or an alternative product (i.e. insurance linked security; finite reinsurance) 3
New Challenges for Market Supervisors Medical liability insurance for public healthcare facilities: premiums collected and number of insured facilities Medical liability risks of public healthcare facilities: financial resources for self-retention insurance and for conventional insurance (2010-2020)
New Challenges for Market Supervisors Challenges for supervisors asses the ART effective insurance risk transfer; avoid improper use (circumvention of capital requirements); pay attention to possible substantial levels of basic risk or other (new) risks; prevent regulatory arbitrage between different legal systems; keep pace with increasingly innovative and bespoke forms of reinsurance and adjust competences and methodologies accordingly; push for convergence in international supervisory practices; the July 2021 EIOPA Opinion on the use of risk mitigation techniques. 5
