The insurance industry in Asia is transforming due to the implementation of International Financial Reporting Standard 17 (IFRS 17) and risk-based capital frameworks. These changes necessitate a reconsideration of traditional pricing models to ensure compliance with new standards while maintaining competitive advantage. This paper explores the impact of these regulatory shifts on product pricing models, highlighting the need for insurers to adapt and innovate.

Key questions we address

How is the landscape changing? We examine the pricing process and continued evolution of pricing metrics.

What are the new challenges for existing pricing models? We assess issues such as the projecting of the economic balance sheet and stochastic best-estimate liability during the pricing stage.

What are challenges with ALM models? We look at the asset-liability model for stochastic pricing and projecting capital requirements under a risk-based-capital (RBC) framework.

What types of ALM metrics can be used for pricing under RBC? Insurers can use variables such as change in value for a 1-basis-point (DV01) and key-rate duration (KDV01).

What are some key features for next-generation pricing tools for IFRS 17 and RBC? We examine three key elements that are essential for effectively assessing different pricing metrics.

How can cloud-based software be used to significantly reduce processing time? We share a case study using Milliman Mind, which employs Excel-like formulas and incorporates high performance computing technology so insurers can run large-scale complex models quickly and efficiently.