While “systematically important” insurance firms may be dreading new regulations that require them to reduce risk and produce a wind-down plan in the event of a collapse, it’s likely to produce something of a mini-hiring boom over the next 18 months.
Last week the International Association of Insurance Supervisors laid out new plans that will apply to 48 “too big to fail” companies that will require them to pull out of activities that are not core to their business, like derivatives, and draw up living wills in order to minimise the impact of a possible collapse on the wider financial system within the next 18 months.
The aim is to “prevent the financial system from any type of systematic threat coming from the insurance industry”, according to IAIS chair Peter Braumüller.
So far, the reaction from insurers hasn’t been positive, particularly as - according to new research from Ernst & Young – nearly half of European firms have yet to get grips with Solvency II due to tougher data management requirements.
PJ Di Giammarino, CEO of regulatory consultancy JWG, says that insurers have been “fighting regulatory reform, but now have to face up to the new reality”. The result, will a need to bring in specialist expertise and shake up their HR practices, he says.
“In the first instance, as senior management look to develop a strategy around this, they’ll need to bring in business analysts to assess the impact of the regulation, which will stretch across multiple jurisdictions and geographies,” he says. “They’ll also need to bring in compliance staff, technology employees to ensure that data reporting is ready as well as HR staff to conduct a risk assessment of key personnel.”
Insurance firms will also have to indulge in some “contractor management”, he says. Namely, convincing key on long-term contractors to take on full time positions. This could prove costly.
While most insurance firms in Europe have slowed down their Solvency II related recruitment, this could spark a whole new round of hiring.