One of the recurring industry stories of 2009 was how insurance bosses were becoming increasingly alarmed about oversight. Broadly, there was a growing concern that the insurance industry was going to suffer under tighter regulation prompted by the financial crisis.

Despite having stood firm while the rest of the financial services industry wobbled, insurers were going to be tarred by the same brush as banks, it seemed – and they didn’t like it. But all is not as it seems, according to a KPMG survey that says many insurance executives actually believe that increased regulation will be positive for the insurance industry in the longterm.

“As the dust settles following the financial crisis, the reality of the long road to recovery has become clear to the insurance industry,” Frank Ellenbürger, global sector leader of KPMG’s insurance practice told Reactionsnet.com in a commentary to the findings. “Many executives have come to the conclusion that new regulation may not be a pleasant medicine in terms of short-term growth but ultimately it’s good for the industry,” he said.

In conjunction with the Economist Intelligence Unit (EIU), KPMG asked about the possible effect of expected increased regulation for the industry over the next three years: 62% of respondents felt that it would help improve risk management, 56% felt it would create better financial stability, while 55% felt it would encourage a longer-term view of business.

The majority of respondents did cite increasing regulatory intervention as the biggest barrier to growth, however, the main impact being increased capital requirements.

This entry was posted by Garry Booth on Wednesday, December 16th, 2009 at 9:22 am and is filed under Insurance Commentary.