development of international insurance supervisory standards yoshihiro kawai secretary general...
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Development of International Insurance Supervisory Standards
Yoshihiro KawaiSecretary General
International Association of Insurance Supervisors
19 November 2013
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Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
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1. Background
Globalised insurer operations• IAIG’s (Internationally Active
Insurance Groups) global market share is more than 50%
AIG crisis • Interconnected markets / products /
institutions
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Home
HostHost
Host
HostHost
Structure of Internationally Active Insurance Groups
1. Background
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EuropeAmericas
Other regions Asia
Interlinkage across borders
1. Background
SecuritiesShadow Banking
Banking Insurance
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Interlinkage across financial sector
1. Background
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1. Background
New regulatory focus: global and panoramic view
• Macroprudential approach • Group-wide supervision• Common supervisory language• Coordination across sectors
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Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
2. IAIS Three-layer Approach
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Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
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.
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
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Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
4. ComFrame
Objectives:• Establish a comprehensive framework for
group-wide supervision• Foster global convergence of regulatory and
supervisory requirements
Scope: • IAIGs and G-SIIs
• Comments due by 16 December 2013• Comments requested on all aspects of
ComFrame
Including: - Capital adequacy assessment- Resolution
4. ComFrame: 2013 Consultation
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
Ultimate Holding Company
Insurance Legal Entity
Insurance Legal Entity
Insurance Legal Entity
Financial Holding Company
Insurance Holding Company
Retail Sub-group
Manufacturing Sub-group
Banking sub-group
Whole Diversified Conglomerate
Financial Conglomerate
Insurance Group
4. ComFrame: Scope of Group-wide Supervision and Power over Holding Companies
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Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
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?
5. ICS: What is ICS (Global Insurance Capital Standard)?
• Not regional led approach
• Not banking led approach
• Unique IAIS initiative
5. ICS: Why ICS now?
• IAIS ExCo intensive discussions
• No quantitative IAIS benchmarks
• No common supervisory language
• Solvency II’s development
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
5. ICS: When is it to be developed?
Date Activity
Early 2014 • Testing of BCRs (Backstop Capital Requirements) • Testing ICS (in particular valuation)
November 2014 • BCRs finalised and ready for implementation by G-SIIs
2015 - 2016 • Testing of ICS
End 2016 • Development of ICS completed by IAIS
2017 - 2018 • Testing and refinement of ICS
End 2018 • Adoption of ICS
2019 • Implementation of ICS begins
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
