IAIS: Aggregate report from assessment on thematic topic of supervisory measures

23 October 2015

IAIS report summarises observance levels from the IAIS’ assessment on these ICPs and the recommendations of the Expert Team for enhancing observance and understanding of the ICPs.

This report contains the aggregate findings of the self-assessments as well as the Expert Team’s recommendations and suggestions on steps that the International Association of Insurance Supervisors (IAIS) and its Members could take to enhance observance and understanding of the assessed ICPs.

The objectives for the thematic SAPR on ICPs 9, 10, and 11 were to:

• identify observance of the standards relating to the assessed theme
• assess the effectiveness of implementation of the standards in a consistent and coherent manner by independent peers
• identify findings that should be communicated to the Executive Committee (EC), the IC and the TC that can support the work of the IAIS in developing strong standards and securing their effective implementation into supervisory practices
• complement the FSAP process of the IMF and the WB and Financial Stability Board (FSB) peer reviews
• identify and analyse regional and global implementation.

The ICPs and standards included in this assessment deal with the day-to-day business of supervision. The Expert Team believes that the limited number of observed supervisory authorities reflects a challenging environment for implementation. Moreover, the Expert Team recognises that many jurisdictions are still developing risk-based supervisory frameworks. An additional challenge existed for Western Europe, where implementation of Solvency II remains a work in progress. Over time, as more jurisdictions move towards a risk based regime and Solvency II implementation advances, observance levels could improve.

Some of the most common challenges to observance include:

• Legislative frameworks do not provide the powers needed to meet the requirements of the standards or do not provide the supervisory flexibility to ensure appropriate actions are taken to achieve the objectives identified in the standards.
• Expectations are only set out in supervisory guidelines (which do not have the force of law), resulting in less effective enforcement and corrective actions.
• Directors and senior management are made aware of supervisory concerns only when the supervisor considers appropriate actions have not been taken.
• Supervisory frameworks do not include a comprehensive supervisory plan, and do not consider the nature, scale, and complexity of the insurers being supervised.
• Supervisory concerns are not resolved in a timely fashion, or to the satisfaction of the supervisor.
• Institutional arrangements in some jurisdictions may impede the ability of some supervisory authorities to achieve their objectives under ICP 10 and ICP 11.

Full report

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