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24th November 2021
IAIS 28th AGM and Annual Conference reflect on key achievements in advancing IAIS Strategic Plan 2020-2024 and focus on evolving trends impacting the insurance sector
The International Association of Insurance Supervisors (IAIS) concluded its November committee meetings and the 28th Annual General Meeting and Annual Conference. Members and stakeholders reviewed progress on the IAIS work programme, shared important learnings about insurance supervision in the new normal and discussed key evolving trends affecting the sector.
“Over the past two weeks, we’ve furthered our work and engaged in deep discussions focussed on strategic themes vital to insurance supervision and to the insurance sector as a whole,” said Vicky Saporta, chair of the IAIS Executive Committee(ExCo). “I’m proud of how we have progressed this work with continuity and intensity of focus, thanks to the excellent cooperation and collaboration across our membership and engagement with our many stakeholders.”
Opening this constructive series of meetings and events, the IAIS ExCo met virtually to discuss and approve key elements of the IAIS work programme and make important leadership appointments.
The IAIS ExCo reaffirmed its commitment to delivering an Insurance Capital Standard(ICS) that is fit for implementation by supervisors by the end of 2024. The ICS monitoring period remains firmly on track, with strong engagement from participating insurers and supervisors. ExCo reconfirmed the existing timeline, while noting that it will continue to monitor the impact from COVID-19.
Progress also continues with assessing whether the Aggregation Method(AM), being developed by the US and other interested jurisdictions, provides comparable outcomes to the ICS. In 2021, work on the draft comparability criteria began later than intended due to COVID-19 operational relief efforts. As a result, the IAIS ExCo agreed that the planned public consultation on the draft comparability criteria will now be launched in the first half of 2022. Overall, comparability assessment timelines remain on track, with the project concluding in 2024 as planned.
The IAIS ExCo approved its first public report on the Global Monitoring Exercise(GME), which draws on data from approximately 60 of the largest international insurance groups and close to 40 insurance supervisors, covering more than 90% of global gross written premiums. The GME is the IAIS’ risk assessment framework to monitor key risks and trends and detect the potential build-up of systemic risk in the global insurance sector. The full GME has been completed for the first time since being adopted as part of the Holistic Framework for the assessment and mitigation of systemic risk Holistic Framework). Last year’s GME was adapted to focus on assessing the impact of COVID-19 on the global insurance sector. The analysis outcomes will be published in the Global Insurance Market Report(GIMAR) later this month.
The IAIS ExCo has also approved the public consultation on the Development of Liquidity Metrics-Phase 2, as part of its process of developing an ancillary indicator for the GME that will serve as a tool to facilitate the IAIS’ monitoring of the global insurance industry’s liquidity risk and for the IAIS to assess insurers’ exposure to liquidity risk. Feedback is invited by 23rd January 2022 and a virtual public background session will be held on 30 November.
The assessment of the comprehensive and consistent implementation of the Holistic Framework’s supervisory material is also proceeding on schedule. A baseline assessment to determine the extent to which supervisors have already implemented the Holistic Framework supervisory material concluded earlier this year and a more intensive targeted assessment of supervisory practices in 10 jurisdictions is underway.
In advance of COP26, the IAIS issued a statement setting out its commitment to urgently advance work to address the risks and opportunities associated with climate change. The IAIS’ focus on climate change and a sustainable transition to net zero is grounded in its mission to help insurance supervisors develop effective supervisory practices to protect policyholders and contribute to the maintenance of global financial stability. The IAIS will also consider what insurance supervisors can do to support insurers in their role as stewards of an orderly transition that involves, for example, building climate resilience and closing the protection gap.
The IAIS also issued a statement recognising the importance of Diversity, Equity and Inclusion(DE&I) considerations to the objectives of insurance supervision and consequently to the IAIS’ mission. There is growing acknowledgement that advancing DE&I within insurers’ organisations and business models supports sound prudential and consumer outcomes as well as sustainability objectives. DE&I also touches on several strategic themes identified in the IAIS Strategic Plan 2020-2024, such as conduct and culture, but also financial inclusion, sustainable economic development and technological innovation.
During the IAIS Town Hall, ExCo chair, Vicky Saporta said “This statement is a first step in the incredibly important journey of supporting our members and the industry in integrating the broad range of benefits to our mandate that a focus on DE&I can bring.”
To guide IAIS activities in this area, the IAIS ExCo appointed Helen Rowell, deputy hair of the Australian Prudential Regulation Authority(APRA), as incoming DE&I Champion.
To support its members with the practical implementation of the IAIS supervisory material, the IAIS’ ExCo approved three papers for publication:
Issues Paper on Insurer Culture
This paper explores the role of insurer culture as a point of intersection for managing prudential and conduct risks. Understanding the various elements that make up an insurer’s culture, and which inform decisions, behaviours and practices across an insurer’s business, can be critical in helping supervisors identify and address prudential and conduct issues in a timely and effective manner. This could, in turn, potentially reduce the occurrence of widespread misconduct and possible financial and consumer harm. The paper also provides illustrations of selected cultural drivers using jurisdictional examples.
Application Paper on Supervisory Colleges
This paper describes the processes and practices related to the establishment and functioning of supervisory colleges for insurance groups with cross-border activities. In particular, the paper supports observance of Insurance Core Principle(ICP)3 (Information Sharing and Confidentiality Requirements) and ICP 25(Supervisory Cooperation and Coordination). The paper fosters an understanding of the work of supervisory colleges and explains the role and involvement of insurers in supervisory colleges. The paper was revised from its original version published in 2014 to reflect revisions to ICPs 3 and 25 and the adoption of ComFrame, as well as to include practical experience with establishing and managing supervisory colleges.
Application Paper on Combating Money Laundering and Terrorist Financing
This paper provides guidance on money laundering and terrorist financing risks affecting the life insurance sector and proposes measures to mitigate the associated risks. The paper supports observance of ICP 22(Anti-Money Laundering and Combating the Financing of Terrorism) and takes into account the FATF (Financial Action Task Force– the intergovernmental global money laundering and terrorist financing standard setter) Recommendations and their “Guidance for a Risk-Based Approach in the Life Insurance Sector”. The paper was revised from its original version published in 2013 to reflect subsequent developments, including the adoption of a revised ICP 22 and various updates of the FATF Recommendations.
A public session discussing all three papers will be held on 6th December.
The IAIS has announced the following appointments:
Shigeru Ariizumi, vice Commissioner for International Affairs, Financial Services Agency, Government of Japan (JFSA), has been elected vice chair of the IAIS Executive Committee. He replaces Norio Hida, also from JFSA.
Petra Hielkema, chairperson of the European Insurance and Occupational Pensions Authority(EIOPA), has been elected FinTech Champion.
Helen Rowell, deputy chair of the Australian Prudential Regulation Authority (APRA), has been elected DE&I Champion.
IAIS Trends(159 articles)