Overview of IAIS Activities

Transcription

1 Stockholm Lonny McPherson Member of Secretariat International Association of Insurance Supervisors (IAIS) Website:

2 1. IAIS mandate, structure and process 2. Revised Insurance Core Principles 3. Accounting 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 2

3 International Association of Insurance Supervisors IAIS mandate: Set international standards for insurance supervision Assist supervisors in implementation of standards Promote cooperation among insurance supervisors Coordinate with regulators in other financial sectors and international organisations 3

4 1.1 IAIS Structure May 2004 Budget Committee Emerging Markets Committee Education Subcommittee Association in General Meeting Dialogue Group Secretariat Executive Committee Technical Committee Secretariat Working Group on Observership & Membership Issues Task Force on the Core Curriculum Project Task Force on the Revision of the By-laws Insurance Laws, Regulations, Practices & Standards Subcommittee Investments Subcommittee Task Force on Assessment & Implementation of ICPs Financial Conglomerates Subcommittee Subcommittee on Enhanced Disclosure Solvency & Actuarial Issues Subcommittee Insurance Fraud Subcommittee Working Group on Electronic Commerce/Internet Accounting Subcommittee Steering Group on Enhancing Transparency & Disclosure in the Reinsurance Sector Reinsurance and Other Forms of Risk Transfer Subcommittee 4

5 1.2 IAIS Standard Setting Process Two tier approach Core Principles Principles Supervisory Standards Guidance & Issues Papers 5

6 1.3 IAIS Development Process (Standards, Principles, Papers etc.) Paper Outline or Initial Draft Working Party Approval or Redirection Technical Committee and Executive Committee Adoption (hopefully) General Meeting of Members WP Members Some Observers IAIS Members & Observers IAIS Members & Observers 6

7 1. IAIS structure and process 2. Insurance Core Principles 3. Accounting 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 7

8 2 Revised IAIS Insurance Core Principles (ICP( ICP s) ) 2003 Preconditions are converted to a principle Expanded to 28 principles (from 17) New areas added: Risk management Market analysis Consumer protection AML/CFT Cover reinsurance supervision widely 8

9 2. ICP Structure & Content Contents Revised ICPs 1. Introduction Reason for supervision, Scope of ICPs, Implementation & Assessment 2. Conditions ICP 1: Conditions for effective insurance supervision 3. The supervisory system ICP 2: Supervisory objectives ICP 3: Supervisory authority ICP 3: Supervisory authority ICP 5: Supervisory cooperation and information sharing 4. The supervised entity ICP 6: Licensing ICP 7: Suitability of persons ICP 8: Changes in control and portfolio transfers ICP 9: Corporate Governance ICP 10: Internal control 9

10 2 ICP Structure & Content Contents 5. Ongoing supervision 6. Prudential requirements ICP 11: Market analysis Revised ICPs ICP 12: Reporting to supervisors and off-site monitoring ICP 13: On-site inspection ICP 14: Preventive and corrective measures ICP 15: Enforcement or sanctions ICP 16: Winding-up or exit from the market ICP 17: Group-wide supervision ICP 18: Risk assessment and management ICP 19: Insurance activity ICP 20: Liabilities ICP 21: Investments ICP 22: Derivatives and similar commitments ICP 23: Capital adequacy and solvency 10

11 2 ICP Structure & Content Contents 7. Markets and consumers ICP 24: Intermediaries ICP 25: Consumer protection Revised ICPs ICP 26: Information, disclosure & transparency towards the market ICP 27: Fraud 8. AML/CFT ICP 28: Anti-money laundering, combating the financing of terrorism Annex 1 Annex 2 References to other IAIS principles, standards and papers Assessment methodology 11

12 1. IAIS structure and process 2. Insurance Core Principles 3. Accounting 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 12

13 3 Accounting -IASB Projects on Insurance and Financial Instruments Insurance contracts project Accounting for insurance contracts Two step approach Phase I (IFRS 4) Phase II Financial instruments project (Revised IAS 39) 13

14 3 Accounting - IAIS Views on IASB Standards The IAIS supports harmonised accounting principles The consistent approach to measurement of assets and liabilities is essential to meaningful disclosure The IAIS disagrees with possible mismatch in accounting models in phase I 14

15 What if assets & liabilities are dissimilarly valued.. (Source) ACLI-IAA Second Joint Research Project, 3 June

16 3 Accounting -IAIS Views on IASB Standards Use of own credit rating Insurance supervisors are unanimously against the use of own credit rating in measurement of liabilities Practicality Practicality should be taken into account, in particular, in emerging markets (short timeframe) Due process 16

17 IAIS Accounting Subcommittee New mandate study possibility of using an IAS compatible model as basis for prudential supervision (taking into account IASB work) more precisely, what methodologies for insurance liabilities, consistent with the likely outcomes of IASB work, could be acceptable for prudential supervision 17

18 1. IAIS structure and process 2. Insurance Core Principles 3. Accounting 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 18

19 4. IAIS Solvency Standards Activities Adopted in 2002 Principles on Capital Adequacy and Solvency (principle) Adopted in 2003: Quantifying and assessing insurance liabilities (2003) (discussion paper) The use of actuaries (guidance paper) Solvency control levels (guidance paper) Stress Testing by insurers (guidance paper) 19

20 4. IAIS Solvency Standards Activities (2-3 3 years) Supervisory Framework (tbd) Supervisory approach Roadmap for development of capital adequacy and solvency standards Suitable Forms of Capital (standard) Capital Adequacy Requirements (std) Asset/Liability Matching (guidance) 20

21 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 21

22 5. Reinsurance Standards Activities Two areas of focus: 1) Supervision of reinsurance Evaluation of reinsurance cover Supervision of reinsurance companies 2) Transparency and disclosure 22

23 5 Reinsurance Standards Activities Supervisory Standard on the Evaluation of the Reinsurance Cover of Primary Insurers and the Securities of their Reinsurers (January 2002) Principles on Minimum Requirements for Supervision of Reinsurers (October 2002) Supervisory Standard on Supervision of Reinsurers (October 2003) 23

24 5 Reinsurance Standards Activities Reinsurance Subcommittee - current activities Development of mutual recognition concept Survey on supervision of reinsurers 24

25 5 Reinsurance Standards Activities Transparency & Disclosure in Reinsurance Sector Responds to concerns raised notably by the Financial Stability Forum (FSF) Task Force on Enhancing Disclosure and Transparency in the Reinsurance Sector (Task Force Re) established in October 2002 Developed an outline for global reinsurance market statistics and presented to FSF Steering Group set up to continue work 25

26 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 26

27 6. Other Standards Activities Enhanced Disclosure Subcommittee Standard on Technical Performance of non-life insurers (to be approved AGM 2004) Disclosure of investment performance & risks (2005) Others Investment Risk Management (guidance ) Anti-Money Laundering & CTF (guidance) Insurance Core Principles Self Assessment Revised Principles on Supervision of Insurance Activities on the Internet (AGM 2004) 27

28 7. Implementation of IAIS Standards Aiding the implementation of standards Organising training & seminars Developing implementation tools Core Curriculum Project Facilitating provision of technical assistance Assisting FSAP Cooperation Forum for discussion amongst supervisors Represent the insurance supervisory sector in international forums Joint Forum, Financial Stability Forum, IASB, IAA, IFAC etc 28

29 International Association of Insurance Supervisors Sources of info on IAIS activities 1) Website: Working party web pages Summary of Meetings (posted monthly) Consultation Documents 2) Newsletter (quarterly) 3) Quarterly and Annual Meetings ( Jordan, 5-7 Oct 2004) 4) Training seminars/conferences 5) Contact us: 29

30 - Recap 1. IAIS mandate, structure and process 2. Revised Insurance Core Principles 3. Accounting 4. Solvency standards 5. Reinsurance standards 6. Other standards activities 7. Implementation of IAIS standards 30

31 Questions??? Thank you!! Lonny McPherson Member of Secretariat 31