KPMG has been awarded the FSB SAM Economic Impact Assessment project. This is a perfect opportunity to combine our insurance, actuarial, capital market and economics skills to deliver on a critical project for the insurance industry and FSB.
We still need to fine-tune scope with the FSB and the Economic Impact Task Team, but we’ll be covering some of these issues:
- Expected impact on capital requirements, capital ratios and free capital for insurerrs
- Resultant scenarios around capital raising, consolidation and what this means for new entrants
- The once-off and BAU expenses of SAM compliance, what this does to returns to policyholders and shareholders.
- Impact on capital markets (especially equity investments, government bonds, swaps, corporate paper, sources of capital issued by insurers) and interaction with banks in this space.
- Impacts on reinsurers, then extending to interactions with other service providers and competing industries
- Likely responses and actions by insures in response to this changed environment
- Potential broader economic impacts on employment and economic activity arising from these changes to an important part of the financial services industry.
There’s fairly obviously a fair amount of subjectivity in all of this and we don’t expect to have everyone happy with the conclusions, but we are going to perform a rigorous analysis of the possibilities and will be engaging with a wide range of stakeholders in forming our views.