^aMercer Oliver Wyman, 99 Park Ave., Fifth Floor, New York, NY10016, USA. E-mail: jdrzik@mow.com

Abstract

Insurance companies are currently under considerable pressure from regulators, analysts and investors to change their approach to risk and capital management. As insurers consider how to implement new ways to measure and manage their business in response to these demands, they would do well to heed the lessons learned in the banking industry, which has been on a similar path for the last decade. Firms that implement a well-constructed risk and capital management framework can derive significant near-term business benefits, and substantially strengthen their medium-term competitive position.