Good (and Not So Good) Capital Management – The Risks of a Poor Process

The capital management process is vital for insurers. Having a robust process helps the business deal with most stress events that may arise, but also boosts the confidence of the regulator, customers, investors, and other stakeholders. However, despite cyber attacks, war, and a global pandemic, conditions for insurers have been generally favourable and there have been a lack of industry events with significant capital impacts, and many companies are maintaining higher-than-needed capital levels. This raises questions on whether insurers’ capital management processes are sufficiently tested, detailed, and useful in practice. With unrivalled insights from the General Insurance ICAAP Survey 2023 and the General Insurance Recovery Plan Survey 2025 (both for Australia), and experience in supporting ICAAPs, ORSAs, and Recovery Plans (Australia and Asia) in the general insurance and private health insurance industries, the session will explore: 

• The dimensions of the capital management process – what’s required (in the standards) vs what’s expected (by the regulator and by industry norms).
• What good vs not-so-good looks like – key areas of the process where there’s a wide range of maturity in the industry, and when these differences lead to increased risk.
• What’s happening in practice – anecdotes and unique examples of best practice, conflicts and outliers, and how processes continue to adapt and evolve for the changing risk landscape.