Newsletter September 2013

Transcription

1 Newsletter September 2013 International Association of Insurance Supervisors Pursuing a Comprehensive Group-Wide Supervisory Framework As you likely know, the IAIS recently completed a methodology for identifying Global Systemically Important Insurers (G-SIIs) as well as policy measures that will apply to them. On the basis of this methodology, the Financial Stability Board (FSB) identified an initial list of G-SIIs and adopted the IAIS policy measures, including requirements for recovery and resolution planning, enhanced groupwide supervision and higher loss absorbency. We have also started developing straightforward, backstop capital requirements as a foundation for HLA requirements for G-SIIs. Apart from these specific measures, the IAIS considers a sound capital and supervisory framework for the insurance sector more broadly to be essential for supporting financial stability. Accordingly, we are currently formulating a workplan to develop a comprehensive group-wide supervisory and regulatory framework for internationally active insurance groups (IAIGs), including a quantitative capital standard. The IAIS considers the development and implementation of a comprehensive group-wide supervisory and regulatory framework for IAIGs, including a quantitative capital standard, essential to our mission of promoting effective and globally consistent regulation and supervision of the insurance industry. Furthermore, we believe that by consistently enhancing sound insurance supervisory and regulatory systems around the world, such a framework will benefit each of our Members, regardless of how developed their marketplace may be. We will develop a workplan to achieve these goals, and look forward to the support of all of our Members in achieving them. Please look to the Newsletter in the coming months for more information on our workplan. We hope this month s articles and the monthly on-line format of the Newsletter continue to be a source of timely information on IAIS and other insurance-related activities and, as always, we welcome your comments and suggestions at any time at iais@bis.org. Sincerely, Yoshihiro Kawai Secretary General International Association of Insurance Supervisors DID YOU KNOW? Since 1998, the IAIS has been hosted in Basel, Switzerland, by the Bank for International Settlements (BIS), which, having been founded in 1930, is the world's oldest international financial organisation. Self-Assessment and Peer Reviews Annual Conference and General Meeting. Recently held seminars... Ask Yoshi... TABLE OF CONTENTS Committee Activities... Upcoming Seminars... Secretariat Update About the IAIS: The IAIS is a global standard setting body whose objectives are to promote effective and globally consistent regulation and supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders; and to contribute to global financial stability. Its membership includes insurance regulators and supervisors from over 200 jurisdictions in nearly 140 countries. More than 130 organisations and individuals representing professional associations, insurance and reinsurance companies, international financial institutions, consultants and other professionals are Observers. For more information, please visit Page 1 of 11

2 Self-Assessment and Peer Review of the IAIS Insurance Core Principles Promoting effective and globally consistent regulation and supervision is a key objective of the IAIS. In support of this objective, IAIS Members are encouraged to assess their supervisory and regulatory framework against the IAIS Insurance Core Principles (ICPs). The criteria for assessing observance of the ICPs and standards are clearly identified in the ICPs themselves. Generally, this includes a review of the preconditions for effective insurance supervision, such as the existence of sound and sustainable macroeconomic and financial sector policies, a welldeveloped public infrastructure and efficient financial markets. An assessment should also take into account the domestic context, industry structure and developmental stage of the financial system and overall macroeconomic conditions. The purpose of an observance assessment, however, goes beyond just simply measuring a jurisdiction s level of observance. Perhaps more importantly, the assessment process assists Members in identifying the extent and nature of any gaps in their supervisory and regulatory frameworks especially those aspects that could affect policyholder protection and insurance sector stability and, therefore, provides a tool with which to address any such gaps. Assessments against the ICPs can be conducted a number of ways: Self-assessments, on either the full set of ICPs or thematically against specific ICPs, performed by insurance supervisors themselves, sometimes with the assistance of other experts Reviews conducted by specialist consultants International Monetary Fund (IMF) and World Bank Financial Sector Assessment Program (FSAP) and Review of Standards and Codes (ROSC). With the adoption of the 2011 Insurance Core Principles, the IAIS committed to develop a program for carrying out targeted self-assessments and peer reviews on thematic topics. This Self-Assessment and Peer Review process (SAPR), which is described below, is led by the IAIS Standards Observance Subcommittee (SOSC). Self-Assessment and Peer Review Process The SAPR is a robust and sophisticated desk audit, conducted on a thematic basis, to assist jurisdictions in assessing whether they observe, largely observe, partly observe or do not observe the ICPs and the individual ICP standards as per the ICP assessment criteria. Where jurisdictions do not observe an ICP or the individual standards under assessment, the SAPR process concisely elaborates on any gaps observance. The SAPR process begins with the identification of an Expert Team consisting of senior supervisors and subject matter experts, along with representatives of the World Bank and IMF. The Expert Team, supported by a specialist, then prepares an online survey that is sent to all IAIS Members. IAIS Members are given four weeks to complete the online survey. Once the survey period is closed, the Expert Team meets to review the survey results. Each IAIS Member who participates in the SAPR is provided with a confidential individual jurisdiction report containing the Expert Team s preliminary assessment of overall observance of the ICPs and standards comprising the theme under assessment. Once a Member receives a draft report, it is invited to provide comments and offer corrections as necessary. The Expert Team then considers the comments and corrections before issuing final confidential reports to participating jurisdictions. Once individual jurisdiction reports are finalised, the Expert Team produces an aggregate report containing global and regional findings. This aggregate report is designed to provide individual IAIS Members with the ability to benchmark their progress on implementation relative to their global and regional peers. 2/11

3 Assessment as a Critical Component of Implementation Assessment is a critically important step in identifying gaps that may exist in regulatory frameworks and supervisory practices. Assessment should occur as part of a cycle of activity. It is key to identifying the gaps where supervisory support, capacity building and technical assistance are necessary. Further, assessment can support development of benchmarks and create peer pressure, both of which can foster consistent implementation of international financial standards. Once an assessment has occurred and, where necessary, targeted implementation support is provided, monitoring of progress is essential to maintaining momentum and ensuring effective implementation. Jurisdictions who have participated in previous SAPR exercises have found the individual reports helpful in improving understanding and observance of the ICPs. In fact, many jurisdictions have drawn on the SAPR exercise and the report provided to design and execute plans to enhance supervisory practices and regulatory frameworks. The IAIS has published a report on its thematic SAPR on Supervisory Cooperation and Information Exchange, which is available here. A similar report on ICPs 1 (Objectives, Powers and Responsibilities of the Supervisor), 2 (Supervisor) and 23 (Group-wide Supervision) will be published shortly. The SOSC is also in the process of conducting a SAPR of ICPs 4 (Licensing), 5 (Suitability of Persons), 7 (Corporate Governance) and 8 (Risk Management and Internal Controls), and is preparing for two SAPRs on ICPs 18 (Intermediaries) and 19 (Conduct of Business) and on ICPs 6 (Changes in Control and Portfolio Transfers), 9 (Supervisory Review and Reporting), 10 (Preventative and Corrective Measures) and 11 (Enforcement). For more information on previous or upcoming SAPRs please contact conor.donaldson@bis.org. 3/11

4 2013 Annual Conference and General Meeting October in Chinese Taipei; Registration open until 10 September, Information about Conference Venue and Hotels available The IAIS 20 th Annual Conference will be hosted by the Financial Supervisory Commission in Chinese Taipei on October The theme of the Annual Conference is Building Sustainable Insurance Supervision in a Changing World. As the global economy is still in recovery mode, and financial supervisory reforms continue to evolve, the conference this year will provide a valuable opportunity for insurance supervisors and industry participants to exchange wisdom and gather expertise to discuss insurance-related issues and initiatives so as to foster stability in the insurance industry and the entire financial service sector. A conference website has been set up as a central resource for information about the conference, General Meeting and Committee meetings. Please look to this section of the Newsletter next month for more updates on the Annual Conference and related meetings. Recently held seminars Willemstad, Curaçao, 31 July - 2 August 2013 The Centrale Bank van Curaçao en Sint Maarten (CBCS), in cooperation with National Association of Insurance Commissioners (NAIC) and IAIS, organised a Regional Seminar on financial analysis and risk focused examinations of insurance companies. 29 participants and 3 trainers attended the Seminar. The Seminar was designed to strengthen the regional insurance supervisors capabilities to meet IAIS Insurance Core Principles 7, 8, 9 and 15 by focusing on the skills necessary to perform proper financial analysis and risk focused examination. Ask Yoshi This section of the Newsletter features Yoshi s responses to questions submitted each month by Members and Observers. If you are interested in submitting a question, please send it to andrew.stolfi@bis.org. We will include your name when we respond to your question unless you ask that it be reported anonymously. Question: What supervisory and supporting material is expected to be adopted next month? Answer: We expect the following material to be adopted in October: 1. ICP 22 (Anti-money laundering and combating the financing of terrorism (AML/CFT)). When the ICPs were revised in 2011, it was noted that ICP 22 would need to be reviewed further in view of the Financial Action Task Force s (FATF) revision of its Recommendations and Methodology, which was in progress at that time. The main changes to the ICP are to reflect a more risk-based approach to AML/CFT. 2. Application Paper on Combating Money Laundering and Terrorist Financing. The Application Paper updates the current Guidance Paper on Combating Money Laundering and Terrorist Financing, and takes into account developments at the FATF. 3. Issues Paper on Policyholder Protection Schemes (PPSs). The Issues Paper acknowledges the role of PPSs as part of the financial safety net and the alignment of the objectives of PPSs with those of supervisory frameworks in protecting policyholders and discusses various issues related to their organisation, operation and functions. It does not express an opinion as to whether PPSs should necessarily be established in a jurisdiction or with what design features. 4/11

5 4. Issues Paper on the Supervision of Cross-border Operations Through Branches. Prepared by the IAIS Insurance Groups and Cross-Sectoral Issues Subcommittee, the Issues Paper reviews current approaches to the supervision of branches on a cross-border basis. Work on the Issues Paper was initiated by means of an in-depth survey and was followed by a review of existing academic literature focussing on regulatory requirements and supervisory practice such as solvency, licensing and governance requirements as well as industry practices. The Issues Paper is meant to provide background, describe current practices and identify related regulatory and supervisory issues. Once finalised, it may form part of the preparatory work for further developing related standards. 5/11

6 Executive Committee Next meeting in London on 20 September Main issues for decision-making at the meeting will be the workplan for development of a comprehensive, group-wide supervisory and regulatory framework for IAIGs and proposals for measures to increase effectiveness and efficiency of the IAIS. peter.vandenbroeke@bis.org Financial Stability Committee G-SII Policy Measures Following release of the policy measures for Global Systemically Important Insurers (G- SIIs) in mid-july, members of the Financial Stability and Technical Committees have continued developing those measures and integrating them into current IAIS work streams. The main focus of these measures includes recovery and resolution planning, enhanced group-wide supervision, and higher loss absorbency (HLA) requirements. Initially, the main focus is on developing straightforward, backstop capital requirements, which will provide the foundation for HLA requirements. This work is scheduled to be finalised by the end of An initial meeting took place on July in London and was coordinated with the ComFrame Field Testing Task Force. This coordination will optimise efficiency and prevent duplication in effort for members, participating firms, and the secretariat. This work is a significant undertaking and further details will be provided in future Newsletters. john.maroney@bis.org Implementation Committee The Coordinated Implementation Framework Implementation Committee Working Parties and at the Implementation Forum meetings on 3-6 September in Gibraltar. Based on feedback from the Working Parties, the CIF will be revised and an Implementation Committee conference call will be scheduled for the end of September to review the CIF ahead of the October Implementation Committee meeting. conor.donaldson@bis.org Technical Committee Discussion continues on plans for developing comprehensive IAIG framework In addition to the G-SII policy measures as reported under the Financial Stability Committee, the Technical Committee will consider a plan for developing a comprehensive, group-wide supervisory and regulatory framework for Internationally Active Insurance Groups (IAIGs), including a quantitative capital standard. The Technical and Financial Stability Committees will have a joint teleconference on 13 September to consider this plan before it is passed to the Executive Committee for discussion and approval. nina.moss@bis.org Accounting and Auditing Issues Subcommittee AAISC continues to discuss IASB insurance contracts exposure draft The AAISC will meet on September in Krakow, Poland to continue its work in developing a response to the IASB s Insurance Contracts Exposure Draft. aina.liepins@bis.org Progress on the development of the Coordinated Implementation Framework (CIF) continued through August. A draft of the CIF will be reviewed and discussed by the 6/11

7 ComFrame Field Testing Task Force Task Force met on July in London, work continues to progress The ComFrame Field Testing Task Force (FTTF) met on 24 to 26 July 2013 in London and is scheduled to meet again in Washington, D.C. on 5-6 September. The FTTF has been meeting back-to-back with the recently formed HLA Drafting Group to ensure coordination of planning and for logistical reasons for members which are common to both groups. The FTTF presented a set of PowerPoint slides to Observers at the end of the meeting on 26 July that set out considerations of the FTTF. These slides are available to Members and Observers on the IAIS website at: An Observer session will also be held on 6 September in Washington, D.C. peter.windsor@bis.org Financial Inclusion Subcommittee The Subcommittee met on 18 July in Manila At its meeting, which was hosted by the Asian Development Bank, the Subcommittee made progress with respect to the Issues Paper on Market Conduct, Distribution and Consumer Protection in Inclusive Insurance and on the Application Paper on Mutuals, Cooperatives and Other Community-based Organisations. The FISC also received a presentation on the activities of the Islamic Financial Services Board (IFSB) from it Assistant Secretary General, Zahid ur Rehman Khokher. The IAIS and IFSB reconfirmed their intention to work on a new Application Paper on Takaful. The FISC meeting took place back-to-back with meetings of the Expert Group for the Self- Assessment and Peer Review of the Application Paper on Regulation and Supervision supporting Inclusive Insurance Markets, the Drafting Group of the Application Paper on Market Conduct, Distribution and Consumer Protection in Inclusive Insurance Markets and a Roundtable organised by the Asian Development Bank. peter.vandenbroeke@bis.org Governance and Compliance Subcommittee The Subcommittee will next meet on September in Washington, D.C. The topics on the agenda include a revised ComFrame draft for comments, and final resolution of previous comments from consultation. The GCS will also have the opportunity to discuss a first version of the Issues Paper on Approaches to Group Corporate Governance - Impact on Control Functions. Other items on the agenda include a discussion of the initial draft report on the Self- Assessment and Peer Review of the Governance ICPs and a first review of the draft teaching material on ICPs 4 and 5. The GCS will also get the opportunity to comment on some standard setting material on External Audit and have a final review of its workstreams in the IAIS Roadmap for The registration form for the next meeting is available on the GCS webpage. nina.moss@bis.org Insurance Groups and Cross- Sectoral Issues Subcommittee Conference calls in June and July, next meeting September in Poland The IGSC held a number of teleconferences and webinars in June and July to discuss and agree upon latest developments within the ComFrame, resolution, branches and ICP 23 workstreams. The ComFrame modules have been undergoing review by the ComFrame Review Drafting Group (CRDG) and were returned to the IGSC for comment on changes. The ICP 23 drafting review team has completed its analysis of double/multiple jeopardy issues and the alignment with the Joint Forum principles for the supervision of 7/11

8 Financial Conglomerates and is now progressing with drafting proposals. Consultation on the Issues Paper on Branches ended in early August and is now undergoing further analysis and resolutions considered to allow for comments received before presentation to the IGSC in Poland. Macroprudential Policy and Surveillance Subcommittee Steps towards developing indicators and analytical tools for supervisors The Macroprudential Policy and Surveillance Subcommittee (MPSSC) will discuss concrete steps towards developing indicators and analytical tools for supervisors at its next meeting on 18 September. The Subcommittee also invited some specific private sector participants to report on their indicators and analytical tools. In addition, the group will prepare for its next physical meeting in Washington, DC, on November. Registration forms for the in-person meeting, kindly hosted by the NAIC, will be available on the IAIS website shortly. Reinsurance and Other Forms of Risk Subcommittee Emerging risks The Reinsurance and Other Forms of Risk Transfer Subcommittee (RSC) will engage in an in-depth consideration on emerging risks at its next meeting in Washington, D.C. on 14 November, which is being held jointly with the Macroprudential Policy and Surveillance Subcommittee (MPSSC). hosted by the NAIC, will be available on the IAIS website shortly. Solvency and Actuarial Issues Subcommittee Drafting group reacts to latest developments on capital needs The Solvency and Actuarial Issues Subcommittee s ad hoc drafting group met in London on August. The group discussed latest feedback on the capital-related issues in the ComFrame draft and also had an interesting discussion on linkage of the work of the Subcommittee and the straightforward, backstop capital requirements together with the ultimate need for a quantitative capital standard. dave.finnis@bis.org Supervisory Cooperation Subcommittee Application Paper on Supervisory Colleges A Drafting Group for the Application Paper on Supervisory Colleges commenced its work over the past period. It had two teleconferences to discuss its workplan. In addition, it provided input to the work of the Supervisory Forum (SF) by suggesting the elements of the college operations with respect to which the SF could collect practical and best practices. The findings from this SF workstream will find its way into the work of the Drafting group in due course. peter.vandenbroeke@bis.org In addition, the RSC continues its work on contributions for (re)insurance supervisors in order to address the (potential) effects from natural catastrophes. A draft agenda and registration forms for the next meeting, kindly 8/11

9 Upcoming Seminars (through November 2013) Regional Seminar, co-organised with FSI, for Supervisors in Africa on Riskbased Supervisory Review and Reporting September 2013, Livingstone, Zambia This seminar is aimed at enhancing capacity building of insurance supervisors in the Sub- Sahara Africa region, mainly focusing on: The essential requirements for introducing a risk-based supervision approach solvency and quantitative assessment of risk early intervention and dealing with troubled insurance companies For more information, please contact velika.mpundu@pia.org.zm Regional Seminar on enhancing transparency and monitoring of insurance markets September 2013, Montevideo, Uruguay The seminar will examine the monitoring and transparency of insurance markets in Latin America through the provision of sound insurance statistics and indicators. Participants will share experiences of improving the relevance and quality of insurance statistics, regionally and globally, and enhancing market monitoring and transparency. Discussions will focus on: international efforts to enhance the monitoring and transparency of the insurance sector, and how these efforts can help to assess the financial strength and performance of the insurance industry developments and recent trends in the insurance markets in Latin America country experiences in insurance market monitoring, research and statisticsgathering participation of Latin American countries in the OECD Global Insurance Statistics project and a stocktaking and comparative assessment of insurance statistics available in public domains in selected Latin American countries other issues and challenges, such as analytical tools, stress testing, and the implications of solvency reform for data collection and transparency. For more information, please contact jcantera@bcu.gub.uy FSI Seminar on Applied Risk Management Techniques and Understanding Internal Models 6-11 October 2013, Beatenberg, Switzerland This seminar is aimed at quantitative specialists including actuaries working in insurance supervisory authorities and will cover topics such as: fundamentals of applied risk management including risk aggregation using copulas use of internal models for regulatory capital purposes and supervisory validation process use of internal models for insurers own business purposes including capital allocation understanding model limitations practical exercises using life and non-life liabilities model For more information, please contact Gunilla.Lofvendahl@bis.org Regional Seminar for Latin American Supervisors on Insurance Groups and Systemic Importance November 2013, Chile This seminar is aimed to bring Latin American Insurance Supervisors the basis for adequate coordination arrangements with involved supervisors on local and cross-border issues on a legal entity and a group-wide basis, and to facilitate the comprehensive oversight of these legal entities and groups, as well as the preparation for crisis management. The following topics will be covered: 9/11

10 IAIS ComFrame SIFIs and indicators relevant to the insurance sector Group-wide supervision of complex insurance groups, adding a macroprudential layer Recovery and resolution of cross-border operations Group-wide supervision and supervisory colleges Readiness for crisis management For more information, please contact mvasquez@svs.cl 10/11

11 Secretariat Update The following individuals have recently joined the Secretariat: Jules Gribble Jules joined the Secretariat in July He brings a broad experience from a professional actuarial career in Australia, having led and worked on life insurance, pensions, risk management and governance assignments. Initially, Jules will focus on supporting the development and testing of the ComFrame initiative, and assisting with development of backstop capital requirements. Having been involved with capacity building for financial services regulators and supervisors for over 15 years, he now hopes to make a contribution in the global context. Jules looks forward to the opportunity of working with his new colleagues in the IAIS, who have welcomed him warmly, and also more widely in the BIS. Jules and his wife also look forward to the opportunity of living in Europe in a famous city full of history and museums. Shinya Kobayashi Shinya joined the IAIS from the Financial Services Agency of Japan in July Prior to joining the IAIS, Shinya represented Japan in several Working Parties of the IAIS, including the Insurance Groups and Cross-Sectoral Issues Subcommittee where he served as Co-Vice Chair and engaged in a number of important workstreams such as group-wide supervision, resolution and supervision of foreign branches. Shinya was also in charge of international affairs in the insurance sector, including bilateral/multi-lateral negotiations, in the FSA. Shinya has travelled to Basel with his wife and two year old son. He looks forward to enjoying Basel life with his family. Tsuyoshi Saito (Japan FSA) Tsuyoshi joined the IAIS in July Before joining the IAIS, he worked for the Financial Services Agency of Japan for over nine years. Most recently, as a Deputy Director, Tsuyoshi was in charge of supervising banks and drafting and finalizing Pillar 3 disclosure requirements for remuneration of banks. He feels that it is a great opportunity to work for the IAIS and is looking forward to working with my colleagues. Bernhard Mayr Bernhard joined the Secretariat in August He has almost 10 years of regulatory experience. Having started with a banking focus, the last few years he has predominantly been working on European insurance policy ( Solvency II ) and financial stability. In the latter field he was the Vice Chair of the EIOPA Financial Stability Committee. Financial stability will also be his main focus at the IAIS. Bernhard is looking forward to the challenges ahead and is very grateful for another opportunity to work in an international environment. 11/11