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, according to Jonathan Dixon, IAIS secretary general.
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.
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