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Current Challenges in Financial Regulation and Supervision – an IAIS Perspective

Current Challenges in Financial Regulation and Supervision – an IAIS Perspective. Peter Braumüller Chairman of the IAIS Executive Committee 2010 Annual Conference of Macedonian Stock Exchange 30 April 2010. Content.

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Current Challenges in Financial Regulation and Supervision – an IAIS Perspective

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  1. Current Challenges in Financial Regulation and Supervision – an IAIS Perspective Peter Braumüller Chairman of the IAIS Executive Committee 2010 Annual Conference of Macedonian Stock Exchange 30 April 2010

  2. Content • The International Association of Insurance Supervisors (IAIS) - structure and objectives • Current global challenges • IAIS Responses • Outlook

  3. The IAIS • Founded in 1994 • Represents insurance regulators and supervisors • World wide membership • 202 Members (including 57 US Members) • 135 Observers • Secretariat based in Basel, Switzerland

  4. Key IAIS objectives Global financial stability Fair, safe and stable insurance markets Policyholder protection Well-regulated and well-supervised insurance markets Improved supervision through standard implementation

  5. Current Global Challenges • Systemic Risk and Insurance • Macroprudential Supervision • Group-wide Supervision • Supervisory Cooperation • Standard Implementation • New Global Supervisory Architecture

  6. SystemicRiskand Insurance Challenges: • Defining systemic risk in the context of insurance • Criteria (Size, Substitutability, Interconnectedness) • IAIS Response: • IAIS Financial Stability Committee finalising a note for submission to the FSB. • Considerations • Time horizon • Insurance business model • Instigation, transmission or amplification of risks

  7. MacroprudentialSurveillence Challenge: Improving macroprudential supervision • IAIS Response: • Exploring the setting-up of a macroprudential surveillance framework • Development of macroprudential tools • New Insurance Core Principle ICP 24

  8. Group-widesupervision Challenge: Strengthening group-wide supervision and minimising cross-sectoral regulatory arbitrage • IAIS Response: • Developing a Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) • On-going standard setting work on insurance groups • Guidance Paper on non-regulated entities

  9. SupervisoryCooperation Challenge: Strengthening international supervisory cooperation • IAIS Response: • IAIS Multilateral Memorandum of Understanding (MMoU) • Review relevant ICPs and standards • Guidance on supervisory colleges and group-wide supervisor

  10. Standard Implementation Challenge: Enhancing standard implementation activities and minimising cross-border regulatory arbitrage • IAIS Response: • Develop IAIS policy on implementation and assessment • Exploring a peer review framework to foster adherence to IAIS Principles and Standards

  11. New Global SupervisoryArchitecture Challenge: G20 and Financial Stability Board (FSB) issue recommendations and monitor implementation • IAIS Response: • IAIS representation on FSB including relevant Working Groups • Ensure appropriate treatment of insurance in withinFSB activities

  12. Outlook • All financial sector supervisors can learn from the recent financial crisis - future crises might be different • Identify the role of insurance in the context of global financial stability • Strengthen implementation and cooperation • Move towards globally consistent regulation and supervision of the insurance industry • Minimise cross-border and cross-sector regulatory arbitrage

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