Ratings agencies are unlikely to downgrade insurers despite the growing worldwide push for more industry regulation, S&P Global says.

Insurance regulators are following the example of banking regulators, albeit at a much slower pace. This lag leads to more effective regulation with significant industry input, S&P notes.

The industry should have ample time to adapt and budget for increased compliance costs.

And S&P’s ratings criteria already include the measurements regulators are considering.

S&P says implementation of the International Financial Reporting Standards will not prompt ratings changes for insurers, even though balance sheets and profit-and-loss accounts will change significantly.

It does not expect ratings changes to US insurers after tax changes that will affect capital adequacy.

Several insurance markets are undergoing pricing reform, and this will cause volatility in underwriting performance in the near term, S&P says. In the long term it should lead to healthy and more sustainable market discipline.