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Development of International Insurance Supervisory Standards

This article discusses the development of international insurance supervisory standards, including the Three-layer Approach, Insurance Core Principles (ICPs), ComFrame, and Global Insurance Capital Standard. It highlights the need for global convergence and coordination across sectors in order to ensure effective supervision in the insurance industry.

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Development of International Insurance Supervisory Standards

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  1. Development of International Insurance Supervisory Standards Yoshihiro Kawai Secretary General International Association of Insurance Supervisors 19 November 2013

  2. Outline • Background • Three-layer Approach • Insurance Core Principles (ICPs) • ComFrame • Global Insurance Capital Standard • Conclusion • 2

  3. 1. Background • Globalised insurer operations • IAIG’s (Internationally Active Insurance Groups) global market share is more than 50% • AIG crisis • Interconnected markets / products / institutions • 3

  4. 1. Background • Host • Structure of Internationally Active Insurance Groups • Host • Host Home • Host • Host • 4

  5. 1. Background • Asia • Europe • Other regions • Americas • Interlinkage across borders • 5

  6. 1. Background • Banking • Insurance • Interlinkage across financial sector • Shadow Banking • Securities • 6

  7. 1. Background • New regulatory focus: global and panoramic view • Macroprudential approach • Group-wide supervision • Common supervisory language • Coordination across sectors • 7

  8. Outline • Background • Three-layer Approach • Insurance Core Principles (ICPs) • ComFrame • Global Insurance Capital Standard • Conclusion • 8

  9. 2. IAIS Three-layer Approach

  10. Outline • Background • Three-layer Approach • Insurance Core Principles (ICPs) • ComFrame • Global Insurance Capital Standard • Conclusion • 10

  11. 3. ICPs • Scope: • Insurance legal entities and insurance groups (unless otherwise specified) • Three levels: • Principles, Standards, and Guidance • Proportionality: • Tailored approach taking into account nature, scale and complexity of insurers.

  12. 3. ICP 23 on Group-wide Supervision • 23.1 Identification of the scope of the group • 23.3 The supervisor does not narrow the identified scope of the group due to lack of legal authority and/or supervisory power

  13. Outline • Background • Three-layer Approach • Insurance Core Principles (ICPs) • ComFrame • Global Insurance Capital Standard • Conclusion • 13

  14. 4. ComFrame • Objectives: • Establish a comprehensive framework for group-wide supervision • Foster global convergence of regulatory and supervisory requirements • Scope: • IAIGs and G-SIIs

  15. 4. ComFrame: 2013 Consultation • Comments due by 16 December 2013 • Comments requested on all aspects of ComFrame • Including: • Capital adequacy assessment • Resolution

  16. 4. ComFrame: Field Testing Module 1 • Module 1 field testing launched with a survey of all IAIS Members • Responses due by 16 December • Survey includes: - Scope of group wide supervision - Population of IAIGs - Powers over the holding company

  17. 4. ComFrame: Scope of Group-wide Supervision and Power over Holding Companies

  18. Outline • Background • Three-layer Approach • Insurance Core Principles (ICPs) • ComFrame • Global Insurance Capital Standard • Conclusion • 18

  19. 5. Risk-based global insurance capital standard (ICS) • What is ICS (Global Insurance Capital Standard) ? • Why ICS now? • Why capital? • When it is to be developed?

  20. 5. ICS: What is ICS (Global Insurance Capital Standard)? • Not regional led approach • Not banking led approach • Unique IAIS initiative

  21. 5. ICS: Why ICS now? • IAIS ExCo intensive discussions • No quantitative IAIS benchmarks • No common supervisory language • Solvency II’s development

  22. 5. ICS: Why capital? • Capital is key supervisory tool • Capital has significant positive impact on other supervisory standards • Capital is a trigger to develop a common supervisory language

  23. 5. ICS: When is it to be developed?

  24. 6. Conclusion: a panoramic supervisory view • Macroprudential approach - G-SII discussion • Group-wide supervision - ComFrame and revision to ICP23 - Enhanced supervision for G-SIIs • Common supervisory language - ComFrame - ICS • Coordination across sectors - NTNI (non traditional and non insurance) focused G-SII policy framework

  25. Thank you very much • www.iaisweb.org • yoshihiro.kawai@bis.org

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