Workshop on the Insurance Core Principles

1. Workshop on the Insurance Core Principles IV Conference on Insurance Regulation and Supervision in Latin America Punta Cana, May 6-9 2003 Makoto Okubo, Advisor International Association of Insurance Supervisors (IAIS)

2. Main items • IAIS Insurance Core Principles (ICPs) • Revision of the ICPs • Comparison of current and proposed ICPs • Questions Workshop on the Insurance Core Principles

3. I. IAIS Insurance Core Principles • Programme for reinforcing insurance systems and the ICPs Identify key supervisory issues Identify weaknesses Draw up action plan Conduct assessment Implement action plan Review implementation Set global standards Standards development Assessment Standards implementation • Core Principles • Standards (principles, standards, guidance papers and others) • Self-assessment • Cooperation with FSAP • Development of tools • Regional seminars • Technical Assistance • Database and analysis Workshop on the Insurance Core Principles

4. I. IAIS Insurance Core Principles • Background • IAIS established in 1994 • Insurance Supervisory Principles in 1997 • Secretariat set-up in Basel in 1998 • FSAP (the Financial Sector Assessment Program) started in 1999 Workshop on the Insurance Core Principles

5. I. IAIS Insurance Core Principles • Background (cont.) • The Insurance Core Principles and Insurance Core Principles Methodology in 2000 • Self-assessment programme developed in 2000 • The Joint Forum comparison of the core principles in banking, insurance and securities sectors in 2001 Workshop on the Insurance Core Principles

6. I. IAIS Insurance Core Principles • Outline of the ICPs (adopted in October 2000) • Organisation of an insurance supervisor • Market conduct • Monitoring and on-site inspection • Licensing and changes in control • Sanctions • Corporate governance • Cross-border business operations • Internal control • Coordination, cooperation et confidentiality • Prudential rules Workshop on the Insurance Core Principles

7. II. Revision to the ICPs • The Workplan • The Task Force on the Revisions to the Insurance Core Principles and Methodology in January 2002 • A new overall framework in March 2002 • Draft for consultation completed by early 2003 • A final document for adoption in Singapore in October 2003 Workshop on the Insurance Core Principles

8. II. Revision to the ICPs • The draft ICPs take into account: • Members’ experience in completing the self-assessment programme • The experience of members and international financial institutions in undertaking the FSAP • The report of the Joint Forum’s working group comparing the core principles in the three financial sectors • Other comments provided by members and observers Workshop on the Insurance Core Principles

9. II. Revision to the ICPs • Outline of the proposed ICPs • Introduction • Ongoing supervision • Conditions for effective insurance supervision • Prudential requirements • The supervisory system • Market and consumers • The supervised entity • Anti-money laundering Workshop on the Insurance Core Principles

10. III. Comparison of current and proposed ICPs • More principles are included: • The conversion of what were previously called “preconditions” into principles to emphasise their fundamental importance to the conduct of effective supervision. • The inclusion of new areas, for example, market analysis, consumer protection and anti-money laundering. • The reordering and further breaking down of some principles Workshop on the Insurance Core Principles

11. III. Comparison of current and proposed ICPs • There are explanatory notes and criteria supporting each principle. • The criteria are categorised as either essential or advanced to enable assessors and those implementing the principles to make allowances for the nature of the market and state of development in a particular jurisdiction. • The criteria should be assessed using five categories: observed, largely observed, partly observed, not observed, and not applicable. Workshop on the Insurance Core Principles

12. III. Comparison of current and proposed ICPs Workshop on the Insurance Core Principles

13. III. Comparison of current and propsed ICPs Workshop on the Insurance Core Principles

14. III. Comparison of current and proposed ICPs Workshop on the Insurance Core Principles

15. III. Comparison of current and proposed ICPs Workshop on the Insurance Core Principles

16. III. Comparison of current and proposed ICPs Workshop on the Insurance Core Principles

17. V. Questions Please discuss the following questions in your group and make a brief presentation. (5 minutes for each group) • Any comments on proposed ICPs • Peer review exercises on ICP13: on-site inspection References • Introduction to the Workshop on 8 May 2003 • Comparison of current and proposed ICPs (draft – 24 April 2003) • Revised ICPs (draft – 31 January 2003) • Assessment methodology (draft – 28 February 2003) • Peer review exercises Workshop on the Insurance Core Principles