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On the measurement of solvency of insurance companies : recent developments that will alter methodsadopted in emerging markets
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On the measurement of solvency of insurance companies : recent developments that will alter methodsadopted in emerging markets

Author

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  • Craig Thorburn

Abstract

Solvency-both as an economic requirement in the market and as a regulatory and supervisory tool-is critical to all insurance markets. Current market conditions, coupled with expected institutional changes, will place particular burdens on emerging and developing markets. Institutional solvency, effective risk management within companies, effective supervisory oversight, and the development of market disciplines are all linked. The author proposes that the effective implementation of the emerging regime needs a careful and diligent phased process of capacity-building. The first priorities are identified as a strong supervisor, a basic solvency margin requirement, and the initiation of efforts to gather appropriate data sets. This can be followed by advancing development of more sophisticated solvency regulation, increased use of technical expertise, and increased use of market disciplines as the community and financial markets become more able to exercise such discipline.

Suggested Citation

  • Craig Thorburn, 2004. "On the measurement of solvency of insurance companies : recent developments that will alter methodsadopted in emerging markets," Policy Research Working Paper Series 3199, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3199
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    Citations

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    Cited by:

    1. Hideya Kubo, 2005. "Proposal for a New Solvency Index for Life Insurance Companies - Detection of Insolvent Companies at an Early Stage by means of Adjusted Basic Profit and Solvency CI," Discussion Papers 2005-40, Kobe University, Graduate School of Business Administration.
    2. Greg Brunner & Pablo Gottret & Birgit Hansl & Vijayasekar Kalavakonda & Somil Nagpal & Nicole Tapay, 2012. "Private Voluntary Health Insurance : Consumer Protection and Prudential Regulation," World Bank Publications - Books, The World Bank Group, number 13093.
    3. Ventsislava Chobanova, 2015. "Bulgarian General Insurance Companies from Solvency II Perspective," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 117-125, April.

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