The international market benefits from the application of a variety of enterprise risk management and capital management practices, and this diversity is better than the imposition of a common framework, chief risk officers (CRO) at global insurance groups say.

Although there are similarities in the principles applied, companies operate according to their individual characteristics, thus avoiding “herd behaviour”, they claim.

Insurance think tank the Geneva Association studied the risk and capital management practices of 19 large insurance groups in response to the ComFrame common framework for supervising internationally active insurance groups, which is being developed by the International Association of Insurance Supervisors (IAIS).

ComFrame is designed for supervision of the largest global insurers and forms part of regulators’ response to the global financial crisis.

The CROs surveyed “did not think common standards for group capital could be developed in the short term”, according to Geneva Association supervisory expert Kathrin Hoppe.

They believe any rush to develop capital standards may have unintended consequences, she says.

The IAIS should recognise the internal economic valuation approaches groups have developed to measure risk exposure and assess capital adequacy, while a set of harmonised principles for assessing group capital should be developed and agreed, the CROs say.

Internal models give companies a consistent view across business units, ensure the long-term nature of insurance business is properly accounted for and support strategic decision-making, according to survey respondents.