Best’s Special Report: Hong Kong’s New Risk-Based Capital Regulatory Framework To Enhance Companies’ Enterprise Risk Management Practices
Hong Kong’s new risk-based capital regulatory framework is expected to strengthen enterprise risk management (ERM) practices among the (re)insurers doing business there, according to a new AM Best report.
The Best’s Special Report includes details and analysis on the risk-based framework that was implemented on
“For Hong Kong companies rated by AM Best, the
The report notes that as a result of the new regulatory scheme, (re)insurers are gradually adjusting their business and investment strategies to optimise capital efficiency. The disclosure requirements are also expected to improve industry-wide transparency and comparability among insurers in
In addition to the three pillars, the
“Under the GWS framework, the HKIA has direct regulatory powers over the designated insurance holding groups, such as requiring DIHCs to comply with group capital requirements and mandating disciplinary actions, and even assessing the suitability of key persons,” said
The legacy system did not consider asset, counterparty or underwriting risk, which are now contemplated and factored in under the new risk-based framework. The new approach will also require insurers to submit quarterly disclosures to regulators and provide audited annual disclosures for more detailed aspects.
To access the full copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=346996.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in
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Source: AM Best
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