09 October 2013

IAIS commits to develop a global insurance capital standard by 2016

“It is undeniable that the business of insurance is global, and global issues demand global responses", said Peter Braumüller, Chair of the IAIS Executive Committee. “This is why the IAIS, whose Members constitute nearly all of the world’s insurance supervisors, has committed to develop and implement the first-ever risk based global insurance capital standard.”

In 2010, the IAIS began developing a comprehensive framework for the supervision of IAIGs, or ComFrame. The IAIS has now agreed to develop a risk based global ICS and to include it within ComFrame, which has always included a capital component within its solvency assessment. This component, which is being finalised in concept, will be used as a starting point for development of the ICS.

In 2014, the IAIS will also develop straightforward, backstop capital requirements (BCRs), which are planned to be finalised and ready for implementation by global systemically important insurers (G-SIIs) in late-2014. BCRs will serve as the foundation for higher loss absorbency (HLA) requirements for G-SIIs, and it is anticipated that their development and testing will also inform development of the ICS.

“From the financial crisis, we learned that our global financial regulatory regime should be more robust and comprehensive in scope, and jurisdictions should share a commitment to global standards", said Michael T McRaith, Chair of the IAIS Technical Committee. “The IAIS – with its mission to promote effective and globally consistent supervision of the insurance industry and to contribute to global financial stability – has an essential role in fulfilling these objectives.”

This commitment follows the IAIS’ announcement in July that it considers a sound capital and supervisory framework for the insurance sector essential for supporting financial stability and protecting policyholders.

“The development of a risk based capital standard for global insurance groups has been established as a priority for the IAIS as part of its work to promote financial stability", stated Elise Liebers, Acting Chair of the IAIS Financial Stability Committee. “The IAIS is committed to advance its development and implementation.”

Press release

IIF to engage in constructive dialogue with IAIS on plans for a global insurance capital standard

The IIF reiterated its support for an internationally consistent global regulatory framework in financial services: "This framework should ensure a stable and resilient financial system, a global level playing field among internationally active firms and avoid regulatory arbitrage.

“There are a number of challenging areas that will need to be addressed before a global capital standard can be fully developed. Focus must be paid to ensuring the appropriate risk sensitivity of the framework, acknowledging diversification benefits as well as recognising the wide variety of business models and institutional and legal frameworks that exist across firms and jurisdictions. This will require a robust exchange of views between the international insurance industry and the regulatory community. The IIF looks forward to playing a constructive role in this process while representing the views of the international insurance community.”

Press release, 13.10.13

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