Insurers press agencies to improve models

The models that rating agencies use to assess the risk capital requirements of insurance firms are not advanced enough, say insurers. Sarfraz Thind looks at the dispute

Capital allocation is likely to be one of the defining factors in the insurance sector over the next few years. With the decline in interest rates in recent times, insurance companies have seen ever diminishing investment returns, and have paid more attention to capital allocation to maintain profitability. And as regulatory standards are tightened across the insurance sector, firms have focused on developing sophisticated models to assess their risk capital requirements.

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