The objectives include:
Risk-Based Regulation: Move focus away from detailed rules. Transparency to ensure institutions understand risks and how they will be dealt with. Each institution is risk rated, advised of risk level, areas of particular risk so they can begin to take measures to reduce risk.
Insurers adopt sound risk management and capital is commensurate with risk; Management and board of insurers are primarily responsible for financial soundness; Quantitative and qualitative assessment – forward looking, consultative, consistent in line with best practices; Prevent problems from occurring rather than attempting to fix problems that have happened; Avoidance – a more effective public policy than problem rectification: “an ounce of prevention worth a pound of cure”; More efficient by allocating resources only where risks are high.