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Tag: IAIS

  • IAIS begins public consultation on HLA

    The International Association of Insurance Supervisors (IAIS) has begun a public consultation to help finalise development of the Higher Loss Absorbency (HLA) requirement for global systemically important insurers (G-SIIs).

    The IAIS is seeking feedback through 21 August on several options to further support and inform the design, development and calibration of the HLA.

    In July 2013, the IAIS published its assessment methodology and policy measures for G-SIIs. These policy measures include a HLA requirement, the primary purpose of which is to help reduce the probability and impact on the financial system of the distress or failure of a G-SII. The HLA is to be delivered to the G20 for endorsement in November 2015 and will apply to G-SIIs from 2019.

    As a foundation for HLA requirements, the IAIS developed in October 2014 the Basic Capital Requirements (BCR) to apply to all group activities, including non-insurance activities, of G-SIIs. When the HLA is implemented, G-SIIs will be expected to hold qualifying regulatory capital that is not less than the sum of the required capital amounts from the BCR and HLA. The public consultation does not focus on specific formulas but rather seeks feedback on a structure designed to address the key objectives of risk sensitivity, robustness and simplicity.

    The IAIS has also released additional information regarding the development of its risk-based, global insurance capital standard (ICS), which will apply to internationally active insurance groups (IAIGs) as part of the IAIS’ common framework for the supervision of IAIGs, or ComFrame.

  • New Zealand joins International Information Exchange

    New Zealand joins International Information Exchange

    THE Chairman of the Executive Committee of the International Association of Insurance Supervisors (IAIS) Felix Hufeld has announced that the insurance supervisor of New Zealand has joined an international supervisory cooperation and information exchange agreement. Nigeria’s National Insurance Commission (NAICOM) is also a member of the IAIS.

    According to IAIS, there are 44 jurisdictions admitted as signatories to the IAIS Multilateral Memorandum of Understanding (MMoU), representing more than 60 per cent of worldwide premium volume.

    The MMoU is a global framework for cooperation and information exchange among insurance supervisors. It sets minimum standards to which signatories must adhere, and all applicants are subject to review and approval by an independent team of IAIS Members. Through membership in the MMoU, supervisors are able to exchange relevant information with and provide assistance to other signatories, thereby promoting the financial stability and sound supervision of cross-border insurance operations for the benefit and protection of consumers.

    Richard Dean, Manager Operational Policy said: “The Reserve Bank of New Zealand is delighted at its accession to the IAIS MMoU, which we regard as another important step in the continuing development of New Zealand’s insurance prudential regulatory regime. “With a number of overseas insurers operating in the New Zealand market the MMoU will be a key support for the Reserve Bank’s supervision.”We are glad to welcome New Zealand as a signatory to the MMoU,” said Mr Hufeld.

    “To achieve our ultimate goal of policyholder protection within the global insurance marketplace, an insurance supervisor needs the ability to cooperate quickly and effectively. The MMoU is an essential regulatory tool, not only in crisis situations, but on a day-to-day basis for supervisors to foster safer and more stable insurance markets, and the IAIS encourages each of its Members to become a MMoU signatory.”Previous MMoU signatories include, among others, Australia, Austria, Bermuda, Canada, Chile, California (USA),Connecticut (USA), Chinese Taipei, France, Germany, Hong Kong, Japan, the Netherlands, Qatar, Singapore, Switzerland, the United Kingdom and Virginia (USA).

  • Insurance regulators plan new basic capital requirement for big insurers

    Insurance regulators plan new basic capital requirement for big insurers

    The International Association of Insurance Supervisors (IAIS) is considering proposed options for the development of basic capital requirements for global systemically important insurers.

    In a document released on Monday, the IAIS is seeking feedback on these options in order to inform an upcoming field testing phase and to further support the design and development of the basic capital requirements.

    The IAIS is seeking to build wide stakeholders’ inputs into the new rules with a public consultation that will run from now till February 3, next year. Another public consultation is planned in 2014 after the global regulatory body has further developed and defined the basic capital requirement.

    In July, this year, the IAIS had released its assessment methodology and policy measures for the global systemically important insurers. The IAIS’ framework of policy measures consists of three main types of measures, including higher loss absorption capacity. It announced in July that as a foundation for the higher loss absorption requirements, the IAIS will as a first step develop the basic capital requirement to apply to all group activities, including non-insurance subsidiaries.

    The development of the basic capital requirement is the first step of a long-term project to develop risk-based, group-wide global capital standards.

    It noted that the second step is the development of high loss absorption requirements to apply to the global systemically important insurers due to be completed by the end of 2015.

    According to the global body, the higher loss absorption capacity will build on the basic capital requirement and address additional capital requirements for the major global insurers, reflecting their systemic importance in the international financial system.

    The final step is the development of a risk-based group-wide global insurance capital standard, due to be completed by the end of 2016, which will also be related to the basic capital requirement.

    “The IAIS has endorsed three substantive principles to guide the development of a “factor-based” basic capital requirement and to provide a high-level framework against which the final design will be considered. These principles are: that major risk categories should be considered, there is comparability of outcomes across jurisdictions and the basic capital requirement has resilience to stress,” according to IAIS.

    According to the implementation timetable, the new basic capital requirement is expected to become operational towards the end of 2014.

    The IAIS is scheduled to approve the basic capital requirement in September 2014 while the Financial Stability Board will review the basic capital requirement proposal between October and November 2014. The G20 is expected to subsequently endorse the basic capital requirement in November 2014.

  • IAIS to help identify global systemically important insurers

    A panel from the global insurance supervisors, the International Association of Insurance Supervisors (IAIS), has focused on the association’s recent work to help identify global systemically important insurers and develop policy measures that apply to them.

    This was made known at the just- concluded 20th Annual Conference of the IAIS which gathered more than 600 members, observers and interested parties in Chinese Taipei for two days of lively discussion.

    The annual conference provides a forum for insurance supervisors to strengthen commitments, share insights and develop new mechanisms to work together. It also provides stakeholders with insights into the on-going work of the IAIS and the future direction of insurance supervision.

    Peter Braumüller, Chair of the IAIS Executive Committee said they are glad to have been able to welcome over 600 supervisors, government officials and insurance professionals for two days of lively discussion and debate on many issues of critical importance within the insurance sector.”

    He stated that with the theme of the conference, ‘Building Sustainable Insurance Supervision in a Changing World’ panels on the ageing of populations were included.

    According to him, this is to help understand potential opportunities and challenges, this panel examined what implications the ageing of populations will have for insurance markets, pension systems and the macro-economy.

    The panel discussed how to implement most effectively the new Coordinated Implementation Framework, including an increased regional focus, and whether there are certain basic requirements that the IAIS should assist all jurisdictions to put in place.

    He said: “Panelists also discussed the A2ii’s new strategic direction and how our partnership will assist IAIS Members implement the Insurance Core Principles in a proportionate manner that creates a path toward increased access to insurance.

    “Once in place, ComFrame will allow supervisors to efficiently and effectively cooperate and coordinate by providing a basis for comparing regulatory and supervisory processes of internationally active insurance groups. As one of the IAIS’ most significant projects, focus was given to ComFrame’s status and the next steps in its development and field testing.

    Other issues discussed according to him are the impacts of global climate change and Consumer protection frameworks and guarantee funds and Consumer protection frameworks and guarantee funds..

    “Panelists discussed matters such as how to improve catastrophic risk management and enhance risk diversification through cross-border cooperation.

    This session focused on the variety of consumer protection frameworks and approaches to guarantee funds, how these funds operate in jurisdictions around the globe and the role of these frameworks and funds in the overall approach to insurance supervision and consumer protection, especially as part of effective resolution?

     

    •Culled from the Telegraph

     

  • IAIS to develop global capital standard

    The International Association of Insurance Supervisors (IAIS) plans to develop a risk based global insurance capital standard (ICS) by 2016.

    The IAIS is a voluntary membership organisation of insurance supervisors and regulators from over 200 jurisdictions in nearly than 140 countries.

    The IAIS said full implementation will begin three years later, after two years of testing and refinement with supervisors and internationally active insurance groups (IAIGs).

    In 2010, the IAIS began developing a comprehensive framework for the supervision of IAIGs, or ComFrame. The IAIS has now agreed to develop a risk based global ICS and to include it within ComFrame, which has always included a capital component within its solvency assessment. This component, which is being finalised in concept, will be used as a starting point for development of the ICS.

    In 2014, the IAIS will also develop straightforward, backstop capital requirements (BCRs), which are planned to be finalised and ready for implementation by global systemically important insurers (G-SIIs) in late-2014. BCRs will serve as the foundation for higher loss absorbency (HLA) requirements for G-SIIs, and it is anticipated that their development and testing will also inform development of the ICS.

    Chair, IAIS Executive Committee, Peter Braumüller, said it is undeniable that the business of insurance is global, and global issues demand global responses,” said. “This is why the IAIS, whose Members constitute nearly all of the world’s insurance supervisors, has committed to develop and implement the first-ever risk based global insurance capital standard.”

    “From the financial crisis, we learned that our global financial regulatory regime should be more robust and comprehensive in scope, and jurisdictions should share a commitment to global standards,” said Michael T. McRaith, Chair of the IAIS Technical Committee.

    “The IAIS with its mission to promote effective and globally consistent supervision of the insurance industry and to contribute to global financial stability has an essential role in fulfilling these objectives.”