Development of International
Insurance Supervisory Standards
Yoshihiro Kawai
Secretary 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
2
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
1. Background
Host
Structure of
Internationally Active
Insurance Groups
Host
Host
Home
Host
Host
4
1. Background
Interlinkage
across borders
Americas
Europe
Other regions
Asia
5
1. Background
Interlinkage
across financial
sector
Banking
Insurance
Shadow
Banking
Securities
6
1. Background
New regulatory focus: global and
panoramic view
•
•
•
•
Macroprudential approach
Group-wide supervision
Common supervisory language
Coordination across sectors
7
Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
8
2. IAIS Three-layer Approach
Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
10
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
Outline
1. Background
2. Three-layer Approach
3. Insurance Core Principles (ICPs)
4. ComFrame
5. Global Insurance Capital Standard
6. Conclusion
13
4. ComFrame
Objectives:
• Establish a comprehensive framework for
group-wide supervision
• Foster global convergence of regulatory and
supervisory requirements
Scope:
• IAIGs and G-SIIs
4. ComFrame: 2013 Consultation
• Comments due by 16 December 2013
• Comments requested on all aspects of
ComFrame
Including:
- Capital adequacy assessment
- Resolution
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
4. ComFrame: Scope of Group-wide Supervision
and Power over Holding Companies
Ultimate Holding
Company
Whole Diversified
Conglomerate
Retail Subgroup
Manufacturing
Sub-group
Financial Conglomerate
Financial Holding
Company
Banking subgroup
Insurance Group
Insurance
Legal Entity
Insurance Holding
Company
Insurance
Legal Entity
Insurance
Legal Entity
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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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
Thank you very much
www.iaisweb.org
[email protected]
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