IAIS adopts global frameworks for cross-border supervision of insurance groups

A comprehensive set of reforms that will enable effective cross-border supervision of insurance groups has been announced by the International Association of Insurance Supervisors (IAIS). IAIS said it has adopted the first global frameworks for supervision of internationally active insurance groups and the mitigation of systemic risk in the insurance sector, which will contribute to global financial stability. The adopted reforms include the Common Framework (ComFrame), the Insurance Capital Standard (ICS), and the Holistic Framework for Systemic Risk in the Insurance Sector. IAIS said the reforms were made possible by a shared commitment from the world’s insurance supervisors to the maintenance of fair, safe and stable insurance markets for the benefit and protection of policyholders. ComFrame establishes supervisory standards and guidance focusing on the effective group-wide supervision of Internationally Active Insurance Groups (IAIGs). IAIS said ComFrame is a comprehensive and outcome-focused framework that provides supervisory minimum requirements tailored to the international activity and size of IAIGs, and will provide supervisors with a common language for the supervision of IAIGs. It should result in more efficient supervisory processes, for the benefit of both supervisors and IAIGs, said IAIS. ICS is being developed with the purpose of creating a common language for supervisory discussions of group solvency of IAIGs to enhance global convergence among group capital standards, said IAIS, noting that the newly agreed ICS version 2.0 for the five-year monitoring period, will start in January 2020. “Feedback from supervisors, ongoing data analysis, public consultations and an economic impact assessment during the monitoring period will aid the further refinement of the ICS prior to its implementation as a group-wide prescribed capital requirement,” said the IAIS. The Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector, has been adopted by the IAIS for implementation from the beginning of 2020. “This framework recognises that systemic risk can arise both from sector-wide trends with regard to specific activities and exposures, as well as from a concentration of these activities and exposures in individual insurers. The Holistic Framework consists of an enhanced set of supervisory policy measures and powers of intervention, an annual IAIS global monitoring exercise and collective discussion on the outcomes and appropriate supervisory responses, and a robust implementation assessment,” IAIS explained. As a result, the Financial Stability Board (FSB) has decided to suspend the identification of global systemically important insurers (G-SIIs) from 2020. In November 2022, the FSB will, based on the initial years of implementation of the Holistic Framework, review the need to either discontinue or re-establish an annual identification of G-SIIs. Victoria Saporta, IAIS executive committee chair, said: “The reforms adopted by our members mark a big step forward as a global community of supervisors in the pursuit of our mission to support the stability and sustainability of the insurance sector, protect policyholders and promote global financial stability.” The European Insurance and Occupational Pensions Authority (EIOPA) has welcomed the adoption of the global frameworks, calling the adoption of ICS version 2.0 a major milestone. Gabriel Bernardino, EIOPA chairman, said: “These developments represent a major step in ensuring an effective supervision of the insurance sector globally. Together, these frameworks take us one step closer to a sound and consistent global insurance regime. EIOPA will continue its commitment and play an active role in the work of the IAIS to strengthen a global approach to supervision and its implementation in the future.”

IAIS adopts global frameworks for cross-border supervision of insurance groups

Want to read this article?

Read Next

The Netherlands sued over PFAS contamination

US insurers’ profitability unlikely to be impacted by Baltimore bridge collapse

WTW posts 4% higher revenue on mixed rating environment

New toolkit from TT Club to assist development of ESG policies

Gallagher reports 20% revenue increase in Q1 with premiums up 7% at renewal

The Netherlands sued over PFAS contamination

US insurers’ profitability unlikely to be impacted by Baltimore bridge collapse

WTW posts 4% higher revenue on mixed rating environment

New toolkit from TT Club to assist development of ESG policies

Gallagher reports 20% revenue increase in Q1 with premiums up 7% at renewal

Want to read this article?

Read Next

The Netherlands sued over PFAS contamination

US insurers’ profitability unlikely to be impacted by Baltimore bridge collapse

WTW posts 4% higher revenue on mixed rating environment

New toolkit from TT Club to assist development of ESG policies

Gallagher reports 20% revenue increase in Q1 with premiums up 7% at renewal

Related Articles