According to a report from AM Best, ongoing recession in many countries, volatile financial markets and the sovereign debt crisis have buffeted the industry. It said companies are racing to meet changing solvency and accounting rules while the soft markets persist, dampening pricing and profitability.
The report, 'European Non-Life Sector Approaches Economic, Regulatory Turning Points', stated: ”Stubbornly low interest rates are placing pressure on insurers’ results, offering no relief from weak underwriting results driven by flat to downward pricing trends". It added that economic twists, such as inflation and, in some cases, unsustainable sovereign debts, could trouble non-life insurers in the future.
In terms of regulation, the report said: "Solvency II remains near the top of insurers’ regulatory agendas, but with talk that Solvency II capital requirements may not take full effect until 2014, uncertainty persists around this issue". It went on to say that slow-moving implementation has "been costly already and promises to further strain insurers with its potentially stricter risk-based capital requirements".
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