Insurers are well positioned to weather the recent turbulence in the financial markets, according to ratings and assessment firm AKG.
The group said the rules and structures imposed by Solvency II and equivalent regimes in offshore jurisdictions would offer greater protection, and said the medium to longer term outlook for the sector was “relatively benign” assuming the disruption caused the Coronavirus is short lived and there is a relatively swift recovery.
Platform, discretionary fund management and non-insured pension providers have also adopted better risk management and capital management / adequacy measures in recent years. However, AKG warned that “unprecedented” market falls and restrictions in flow could still present “significant challenges” and said a prolonged disruption could lead to market exits or further M&A activity.
Similarly, life insurers, although relatively well positioned, could also be tested by the unprecedented nature of current markets and said that volatility in ratio measures is likely.
Separately, AKG said it expects companies to continue to be open and collaborative to enable it to deliver information and assurance into the market, despite the uncertainty dominating global markets and businesses.
It stressed that where companies are vague or resistant, and information is not readily forthcoming, it would adopt a “suitably cautious stance” in line with the needs of advisers and their clients.
In a statement, it said: “This should be fully understood by companies and AKG would anticipate that companies will continue the good work of enabling independent expert scrutiny and delivery of information to support robust selection and advice through the advisory sector.”
AKG added that in the current fast-moving economic environment it would be constantly monitoring the market and publishing updated comment when appropriate.