Australia, Singapore lead in regulatory sophistication within insurance markets

While Japan is just on their heels.

It has been observed that as Asia-Pacific's insurance markets are at different stages of development, it is Australia and Singapore that are leading the region in regulatory sophistication.

According to a release from Standard & Poor's Ratings Services, its credit analyst Michael Vine said that Japan, meanwhile, is expected to move closer in the coming years.

"These leading markets compare favorably to advanced global markets, although Asia-Pacific more broadly lags behind Europe, the U.S., and Canada in regulatory oversight", he said.

The release noted that regulatory sophistication within the insurance sector is on the rise across Asia-Pacific as the region responds to the reach and influence of global regulatory initiatives and now faces a second stage of opportunity and change.

Here's more from Standard & Poor's Ratings Services:

The report notes country-specific regulatory initiatives are driving improvements in internal control frameworks across a number of areas, including capital adequacy, ERM frameworks, corporate governance practices, reinsurance arrangements, and group-wide supervision.

But there are some common themes. A number of Asia's regulators aim for alignment of the local jurisdiction to the IAIS' Insurance Core Principles.

At the same time, some have applied for temporary equivalence under the Solvency II capital regime, including Australia's APRA, Singapore's MAS, Hong Kong's HKOCI, and China's CIRC. Other regulators in the region are at a much earlier stage of working toward the same goal, including Taiwan's FSC, while we view the Philippines as a downside outlier.

The report provides a detailed look at each Asia-Pacific country's current regulatory position, including their respective self-supervision efforts to date, and explains potential impact of global initiatives including: the application of a European Solvency II-equivalent regime within some Asia-Pacific markets (Solvency II); the implementation of the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame); and designation of qualifying insurers as a "globally systemically important insurer" (a G-SII).