ICS to be ‘most significant’ regulatory development for global insurers in 2024

Written by Adam Cadle

02/10/2023

Finalisation of the Insurance Capital Standard (ICS) is likely to be the most significant regulatory development for global insurers in 2024, Fitch Ratings has said.

A public consultation on the ICS as a prescribed capital requirement (PCR) closed on 21 September 2023 and the International Association of Insurance Supervisors (IAIS) is assessing the economic impact of the standard, which is set to take effect by end-2024. Fitch said it does not expect the ICS to impose significantly different regulatory capital requirements given the widespread adoption of Solvency II-like frameworks and the likely flexibility to accommodate national market specificities and even the US aggregation method. It is therefore likely to be neutral for ratings and will not necessarily lead to fully consistent group capital calculations, the ratings agency said.

Another important regulatory development for insurers next year will be the introduction of IFRS sustainability disclosures, Fitch added.

The International Sustainability Standards Board finalised the reporting templates for these in June 2023 and insurers will have to disclose the financial materiality of climate-change risks for annual reporting periods from 1 January 2024. “The disclosures will add to the growing influence of ESG considerations on insurers’ underwriting and investment strategies,” Fitch stated.

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