Page 98 - Risk Management in current scenario

RISK BASED CAPITAL - ISSUES,

CHALLENGES AND OPPORTUNITIES

Introduction

A Stable insurance sector is encouraging various insurance regulators
around the world adopting Risk-Based Capital ("RBC"). In Asia, many
insurance markets have moved to RBC or moving towards more advanced
RBC 2 regimes, the latest being China implemented RBC in 2016,
Philippines is getting ready for RBC 2 in 2017, Singapore implementing
RBC 2 sometimes in 2017-18, Hong Kong time frame 2017-22 is under
way besides, Malaysia, South Korea, Thailand, /ndonesia and Taiwan have
already implemented RBC.

Why RBC?

The purpose of RBC is to bring insurance sector more responsive to
changes in both local, global economic and demographic environment.
Many failures have been witnessed in the past in the financial sectors
particularly in banking and insurance and need was observed to have
solvency regime that can withstand some financial turmoil.

So instead of having a static solvency regime where solvency capital
remains more or less static despite changes in the demographic and
economic environment, the world have moved and is moving towards
an era where the solvency capital will be dynamic to the changes in
various internal and external risk factors.

96 | Risk Management in Current Scenario