Regulatory risks represent the potential impact of changes in the regulatory and supervisory regimes of the countries in which we operate. In 2015, the global regulatory agenda continued to accelerate. Governments and regulators rolled out new policies and conducted numerous consultations and field tests on regulations with a direct impact on the re/insurance sector. Furthermore, regulators are increasing their work on compliance and market conduct issues.
Swiss Re remained fully engaged in the regulatory debate throughout 2015, supporting regulatory convergence as well as increased application of economic and risk-based principles. At the same time, we strive to mitigate developments that may adversely affect the re/insurance industry’s ability to foster financial and economic stability.
For example, we share the broad concerns of the re/insurance industry regarding the cumulative and cross-sectoral impacts of some of the proposed reforms. Regulatory fragmentation is a key issue, particularly in Europe, with the lack of harmonisation in introducing Solvency II, but also in the context of cross-border business and protectionist measures introduced in several growth and mature markets.
After more than ten years of development, Solvency II was implemented across the European Economic Area in January 2016. Swiss Re has been actively engaged in the implementation process, particularly in supporting the equivalence for the Swiss insurance supervisory system. The European Union has recognised the Swiss system, including the Swiss Solvency Test (SST), as fully equivalent.
Many countries impose restrictions on the transaction of reinsurance business. The Global Reinsurance Forum, which Swiss Re is currently chairing, actively promotes the advantages of open and competitive markets, in particular the greater choice of reinsurers, products and prices, as well as benefits from diversification through the spreading of risk and increased financial stability.