IAIS Standards Setting Activities

Transcription

1 London 3 Secretary General International Association of Insurance Supervisors (IAIS) Website:

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

3 1.1 IAIS Structure January 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 Task Force on Enhancing Transparency & Disclosure in the Reinsurance Sector Reinsurance and Other Forms of Risk Transfer Subcommittee 3

4 1.2 IAIS Standard Setting Two pillar approach Core Principles Principles Supervisory Standards Guidance & Issues Papers 4

5 1.3 IAIS Document Adoption 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 5

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

7 2.1 History of Insurance Core Principles The first ICPs adopted in October 2000, based on 1997 Insurance supervisory principles FSAP (the Financial Sector Assessment Program) started in 1999 Joint Forum comparison of the core principles in banking, insurance and securities sectors in 2001 FSAP experiences Final Revised ICPs adopted in Oct 03 7

8 2.2 Major ICP Changes Extend scope Reinforce existing principles Cover reinsurance supervision widely Preconditions are converted to a principle Integrate principles and methodology 8

9 2.3 ICP Structure & Content Contents 1. Introduction 2. Conditions 3. The supervisory system Revised ICPs Reason for supervision, Scope of ICPs, Implementation & Assessment ICP 1: Conditions for effective insurance supervision 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 2.3 ICP Structure & Content Contents 5. Ongoing supervision 6. Prudential requirements ICP 11: Market analysis 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 Revised ICPs 10

11 2.3 ICP Structure & Content Contents 7. Markets and consumers 8. AML/CFT Annex 1 Annex 2 Revised ICPs ICP 24: Intermediaries ICP 25: Consumer protection ICP 26: Information, disclosure & transparency towards the market ICP 27: Fraud ICP 28: Anti-money laundering, combating the financing of terrorism References to other IAIS principles, standards and papers Assessment methodology 11

12 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Implementation of IAIS standards 12

13 3.1 IASB projects on insurance and financial instruments Insurance contracts project Accounting for insurance contracts Two step approach Phase I Phase II Financial instruments project (Revised IAS 39) 13

14 3.2 IAIS views on IASB standards The IAIS supports harmonised accounting principles The consistent approach to assets and liabilities is essential The IAIS disagrees to possible mismatch in accounting models in phase I 14

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

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

17 3.2 IAIS Views on IASB standards (cont.) IAIS proposal to mitigate the problem of mismatch Temporary modification to asset measurement bases in the phase I Introduction of the concept: assets with fixed maturity matching insurance liabilities and held at amortised cost 17

18 3.2 IAIS Views on IASB standards (cont.) 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 Due process 18

19 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Implementation of IAIS standards 19

20 4. Solvency standards Adopted in 2002 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) 20

21 4. Solvency standards (cont.) In next two years: Suitable forms of capital (standard) Capital adequacy requirements (standard) Framework on solvency requirements 21

22 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Implementation of IAIS standards 22

23 5. Reinsurance standards Supervision of reinsurance Evaluation of reinsurance cover Supervision of reinsurance companies Disclosure and transparency of reinsurance 23

24 5.1 Evaluation of Reins Cover Supervisory Standard on the Evaluation of the Reinsurance Cover of Primary Insurers and the Securities of their Reinsurers in January 2002 Applies to the supervision of the reinsurance cover of primary insurers It discusses: The policies and procedures that primary insurers should have in place Supervisory approaches for evaluating the adequacy of the reinsurance cover 24

25 5.2 Supervision of Reinsurers Principles on Minimum Requirements for Supervision of Reinsurers in October 2002 All reinsurers should be supervised Anticipate a global approach to supervision based on supervision by the home jurisdiction 25

26 5.3 Further Supervision of Reinsurers Standard on Supervision of Reinsurers in October 2003 Focuses on Supervisory Review Technical provisions Investments & liquidity Economic capital Corporate governance Exchange of information Current activities: Mutual recognition 26

27 5.4 Transparency of Reinsurance Responds to concerns raised notably by the Financial Stability Forum Task Force on Enhancing Disclosure and Transparency in the Reinsurance Sector (Task Force Re) established in October 2002 Developing an outline for global reinsurance market statistics 27

28 Overview 1. IAIS structure and process 2. Insurance Core Principles 3. IAIS views on IASB standards 4. Solvency standards 5. Reinsurance standards 6. Implementation of IAIS standards 28

29 6. Implementation of IAIS standards Aiding the Implementation of Standards Organising Training & Seminars Developing implementation tools Facilitating Provision of Technical Assistance Assisting FSAP Cooperation Forum for Discussion amongst Supervisors Represent the Insurance Sector in International Forums Joint Forum, Financial Stability Forum, IASB, IFAC etc 29

30 International Association of Insurance Supervisors (IAIS) 30