The real objective should be to transform the insurance sector into one with real economic and developmental impact.
There is a pivotal role for supervisory and regulatory authorities in the financial, business, banking, and insurance sectors, as sustainable development goals and economic growth cannot be achieved without a well-developed infrastructure and qualified national human capital in the respective countries.
The insurance and banking industries rely heavily on international standards, governance, risk management, and regulatory compliance. One of the key advantages of these standards is that they safeguard the interests of the regulator and the supervisory framework, particularly in relation to financial stability and the protection of stakeholders’ rights, despite the differences in interests between regulators and the targeted groups of shareholders, policyholders, bank account holders, and creditors.
On the other hand, one of the main challenges associated with some of these standards is that they tend to focus more on financial products and services rather than on the nature of markets and their developmental needs, meaning they are more: Product-Oriented rather than Market-Oriented Companies and Banks.
Hence, there is a need to review certain regulatory policies to achieve a better balance between supervision and economic development, and to move towards a framework of: Risk-Based & Development-Oriented Supervision, which combines risk management with economic growth objectives.
Emerging markets also require flexible and gradual regulatory frameworks that take into account the size of the local economy and its stage of development, along with a strong focus on developing national capabilities in actuarial science, risk management, compliance, and financial technology (FinTech).
Ultimately, the success of the financial and insurance sectors should be measured by their contribution to protecting the national economy, enhancing investment, increasing insurance penetration, and raising their contribution to GDP, rather than focusing solely on profitability or regulatory compliance.
The real objective should be to transform the insurance sector into one with real economic and developmental impact.
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