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

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Presentation on theme: "Development of International Insurance Supervisory Standards Yoshihiro Kawai Secretary General International Association of Insurance Supervisors 19 November."— Presentation transcript:

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

2 2 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

3 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

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

5 5 EuropeAmericas Other regionsAsia Interlinkage across borders 1. Background

6 Securities Shadow Banking BankingInsurance 6 Interlinkage across financial sector 1. Background

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

8 8 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

9 2. IAIS Three-layer Approach

10 10 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

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 13 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

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

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 18 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

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? DateActivity Early 2014Testing of BCRs (Backstop Capital Requirements) Testing ICS (in particular valuation) November 2014BCRs finalised and ready for implementation by G-SIIs Testing of ICS End 2016Development of ICS completed by IAIS Testing and refinement of ICS End 2018Adoption of ICS 2019Implementation of ICS begins

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 25


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