Development of international insurance supervisory standards
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Development of International Insurance Supervisory Standards. Yoshihiro Kawai Secretary General International Association of Insurance Supervisors 19 November 2013. Outline. Background Three-layer Approach Insurance Core Principles (ICPs) ComFrame Global Insurance Capital Standard

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Development of International Insurance Supervisory Standards

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Development of International Insurance Supervisory Standards

Yoshihiro Kawai

Secretary General

International Association of Insurance Supervisors

19 November 2013


Outline

  • Background

  • Three-layer Approach

  • Insurance Core Principles (ICPs)

  • ComFrame

  • Global Insurance Capital Standard

  • 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

  • Asia

  • Europe

  • Other regions

  • Americas

  • Interlinkage across borders

  • 5


1. Background

  • Banking

  • Insurance

  • Interlinkage across financial sector

  • 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

  • Background

  • Three-layer Approach

  • Insurance Core Principles (ICPs)

  • ComFrame

  • Global Insurance Capital Standard

  • Conclusion

  • 8


2. IAIS Three-layer Approach


Outline

  • Background

  • Three-layer Approach

  • Insurance Core Principles (ICPs)

  • ComFrame

  • Global Insurance Capital Standard

  • 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

  • Background

  • Three-layer Approach

  • Insurance Core Principles (ICPs)

  • ComFrame

  • Global Insurance Capital Standard

  • 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


Outline

  • Background

  • Three-layer Approach

  • Insurance Core Principles (ICPs)

  • ComFrame

  • Global Insurance Capital Standard

  • Conclusion

  • 18


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?


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

  • yoshihiro.kawai@bis.org


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