In 2025, insurance regulators in the Asia-Pacific region continued to pursue a more growth-oriented and flexible regulatory approach, aiming to support market expansion and innovation by easing capital requirements and enhancing consumer protections, Fitch Ratings noted in its latest quarterly review.
This contrasts with US and European regulators who are moving toward stricter oversight and conservative risk management, reflecting their focus on tightening supervision of reinsurance, reserving practices, and systemic risk control.
The findings were published in Fitch Ratings’ Global Insurance Regulatory Developments 3Q25 report on September 29, which tracks insurance supervisory changes across major markets and highlights regulatory priorities from April to September 2025.
Within the Asia-Pacific region, the rating agency highlighted Chinese insurers’ equity exposure, Taiwanese life insurers’ capital positions, South Korea’s eased capital adequacy ratio, and Australia’s annuity capital review as areas to watch in the region.
In China, the State Council Information Office announced a 10% reduction in the capital requirement for insurers’ equity investments, which Fitch said is expected to benefit life insurers most by improving solvency ratios and supporting expansion. Separately, the National Financial Regulatory Administration has introduced new rules to realign commissions, raise professional standards, and strengthen long-term service capabilities among life insurance agents.
In August, the Australian Prudential Regulation Authority launched a consultation on annuity capital rules, proposing reduced requirements in exchange for stricter risk management. Fitch said the measure is intended to help insurers offer more competitively priced annuities without unduly increasing policyholder risk.
South Korea’s Financial Services Commission lowered the recommended capital adequacy ratio for insurers from 150% to 130%, easing immediate capital burdens for companies and affecting regulatory actions such as subordinated bond redemption and licensing.
Other regulators in the region also advanced reforms. Hong Kong set a 50% cap on broker referral fees effective October 1, 2025. Singapore confirmed plans to adopt a counter-cyclical adjustment for equity risk, while Indonesia will require financial groups to consolidate all domestic institutions under a local parent by 2026.
Meanwhile, Taiwan introduced interim measures allowing insurers to use six-month average exchange rates to manage currency volatility ahead of new capital and accounting standards. In New Zealand, stress test results published in May showed up to NZ$62bn (US$36bn) in earthquake losses and NZ$100bn market-wide and included cyber scenarios such as data breaches, cloud outages, and ransomware attacks.
These regional regulatory shifts also have implications for the reinsurance market. In September, Fitch said in its latest Asian Reinsurance Monitor that regulatory changes in 2025 could alter APAC reinsurers’ risk appetites and slow the softening of reinsurance rates. The agency expects reinsurers to prioritise disciplined underwriting and capital management for the rest of the year to sustain profitability amid evolving risks.
Global regulators step up oversight
Globally, the International Association of Insurance Supervisors (IAIS) advanced several initiatives between April and September 2025. It approved high-level principles for the Insurance Capital Standards implementation assessment, laying the ground for jurisdictional reviews from 2027. The IAIS also issued application papers on climate risk integration, the supervision of AI, and fair treatment of consumers, and launched a consultation on operational resilience objectives and toolkits.
In the United States, regulatory changes centred on reinsurance and reserving practices. The National Association of Insurance Commissioners (NAIC) adopted a guideline requiring asset adequacy testing for life reinsurance treaties, reflecting regulators’ concern over growing offshore use. Fitch noted that the domestic regulator will decide whether additional reserves are required as a result of the testing.
California has also cleared the first wildfire catastrophe model, which Fitch said was designed to replace historical data rules that had contributed to insurer withdrawals from wildfire-distressed areas as pricing failed to keep pace with claims inflation.
In Europe, the Bank of England raised concerns over the growing use of funded reinsurance treaties and signalled possible restrictions. The European Insurance and Occupational Pensions Authority issued guidance on AI governance and mass-lapse reinsurance and opened consultations on the EU Insurance Recovery and Resolution Directive. The European Commission also reviewed the Solvency II delegated regulation, proposing recalibrated capital requirements for long-term equity and natural catastrophe risks.
Fitch Ratings’ latest review showed that despite regional differences, regulatory bodies are converging on broader themes such as protecting solvency headroom, strengthening consumer safeguards, and addressing emerging risks, including climate change and the use of AI in insurance.
