Insurers will adopt a risk management company for solvency purposes. From 1 January 2017, they will have to implement a Risk Management Function (RMF) in order to meet the deadline of 1 July 2017, when the new rule takes effect. The purpose of this requirement is in line with a greater respect for fundamental principles of the International Association of Insurance Supervisors. The Financial Services Commission (FSC) is currently circulating the details surrounding risk management.
RMF requires the appointment of a Risk Officer who shall be a senior official of suitably qualified and experienced company. The Risk Officer, who reports directly to the board of directors, to be appointed after having the approval of the FSC. He is responsible for compliance and risk management. It should not be involved in commercial activities of the company generating revenue in order to avoid conflicts of interest.
For a more efficient sector
The board of directors of an insurance company will be required to implement a RMF, which must include a risk management strategy, an internal assessment of risk and solvency, a liquidity policy and a management framework risk, among others. The insurer must be able to present a development plan updated annually with financial projections over three years, the projected solvency situations, and the objectives and means will be developed to achieve them.
The RMF will enable insurers to develop and implement strategies, policies, procedures and controls to manage their risks. This is for the regulator to ensure that the insurance sector is well managed and to make it more efficient, more sustainable and more efficient.
With the new rules, the FSC will be better empowered to oversee the risk assessment of this sector. They will allow him to have more latitude to intervene more measured and more credible.