IAIS sets out its role and strategy for 2018 and beyond

The International Association of Insurance Supervisors (IAIS) remains on track to deliver its current commitments on ComFrame, the Insurance Capital Standard (ICS) and the mitigation of systemic risk in the insurance sector. This is according to Jonathan Dixon, IAIS secretary general, speaking at the Geneva association’s 34th Annual Regulation and Supervision (PROGRES) seminar. Mr Dixon said completing the IAIS’s international framework is vital to help promote a more stable global financial system, which means the IAIS must deliver on its current commitments, including an ICS that is implementable by the end of 2019 in the form of confidential reporting to supervisory colleges. He said the IAIS’s work on an activities-based approach (ABA) to the mitigation of systemic risk is taking on increased importance globally. “The IAIS has always advocated that insurance poses a different set of systemic threats than, say, banking and that these are related to insurance activities that involve liquidity risks and macroeconomic exposure. This thinking naturally lends itself to an ABA to systemic risk,” he said. “The interaction between an Entities-Based Approach (EBA) and an ABA, specifically whether an ABA is a complement to, or substitute for, an EBA, is a key question the IAIS will discuss in the year ahead.” He said any approach will need to be able to articulate how the IAIS and its members intend to mitigate potential systemic risk at the global level arising from the collective exposures of insurers and the potential for a systemic impact due to the failure of an individual insurer. The IAIS plans to outline its thinking on a holistic approach in a consultation document for public consultation by the end of 2018. Mr Dixon stressed that the IAIS had made significant improvements in recent years on the issue of stakeholder involvement, and held substantially more stakeholder meetings on a broader range of issues than ever before in 2017. He noted that on the issue of global standards, IAIS members need to focus their attention towards supporting implementation and assessing observance. The IAIS has adopted a new strategy to strengthen its approach to implementation, including efforts to build the strategic partnerships needed to support capacity-building among supervisors. He pointed to a recent five-year agreement with the International Actuarial Association and the Access to Insurance Initiative to support supervisory capacity building in the area of actuarial services. The new strategy also includes providing greater opportunities for supervisors to exchange views and share best practices on emerging/emerged risks and the ongoing challenge of implementation, as well as supporting cooperation and information exchange among supervisors. “The IAIS is increasingly focused on responding to emerging risks and trends in the insurance marketplace and developing appropriate supervisory guidance relevant to all of our members. We recognise that further discussion on our approach to emerging risks is needed and that coordination is a critical challenge,” said Mr Dixon.

IAIS sets out its role and strategy for 2018 and beyond

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