Insurance supervisors face resource crunch in evolving market
A new BIS paper highlights that insurance supervisors globally face increasing challenges in securing adequate human, financial, and technological resources. This struggle is driven by ongoing regulatory reforms, technological advancements, and evolving market dynamics.
Supervision under pressure
Insurance supervisory authorities face increasing pressure to effectively manage their resources, encompassing human, financial, and technological capabilities.
A new Bank for International Settlements (BIS) paper highlights that this challenge is driven by ongoing regulatory reforms, rapid technological advancements, and broader macroeconomic, geopolitical, and demographic trends.
Budgetary scrutiny and rising accountability expectations further complicate the balance between resource constraints and effective oversight.
A survey of 23 insurance supervisors reveals common public sector challenges: less competitive remuneration compared to the private sector, rigid hiring processes, and budget limitations.
These factors hinder the ability to attract and retain skilled personnel.
High turnover rates, difficulties in recruiting younger replacements for an ageing workforce, and the diversion of resources to new mandates or crisis response further strain supervisory capacity.
Securing stable funding
Supervisors also struggle to secure adequate and stable funding, which significantly hinders their ability to fulfil core responsibilities.
Budgetary constraints often limit investment in information technology, capacity building, and addressing emerging risks.
These financial limitations also impact the ability to resolve human resource challenges, such as sourcing external expertise for unexpected disruptions.
The paper emphasizes that a sound resource management approach, involving clear identification of needs and effective allocation, is crucial.
Most surveyed authorities use annual budgeting, guided by institutional priorities.
Funding sources vary, but most rely on industry fees and levies.
Central bank-affiliated authorities are typically funded by their respective central banks.
Beyond rules, capacity matters
This BIS paper highlights a critical, often overlooked, aspect of financial stability: the foundational capacity of supervisors themselves.
Without adequate resources and skilled personnel, even robust regulatory frameworks risk becoming ineffective as the insurance sector rapidly evolves with new technologies and risks.
Investment in supervisory capabilities is therefore not merely an operational cost, but a prerequisite for safeguarding policyholders and broader financial stability.