Standard and Poor’s (S&P) is considering a change in the way it assesses international insurance providers.

The ratings agency is seeking industry comment on its revised risk-based capital adequacy model, which analyses reserve provisions in the property and casualty, life, health and reinsurance markets. The changes put greater emphasis on longer-term risks.

That quantitative part of the model is combined with qualitative information on a company’s capital structure, reserve adequacy and reliance on reinsurance policies, to form a comprehensive opinion on the level of capitalisation.

S&P says its methods help standardise company performances across the wide range of regulatory regimes and accounting standards. Analysts still play a critical role. Skilled staff adjust the model to best assess risks unique to the company in question, while maintaining the important standard of comparability between subjects.

The company expects slight changes in the way some parts of an insurer’s business are considered, and property insurers will probably have to increase their reserve levels.

“Areas likely to see increased charges are the higher-risk exposures such as long-tail liability reserves, equity holdings, large asset liability duration mismatch, longevity exposures and natural peril catastrophic risks.”

Lower-risk exposures like short-tail reserves and short-term bonds are likely to enjoy reduced charges.

The company is accepting comments on the new system until February 14.