IAIS Standards Setting Activities and the IAIS Standards Setting Activities and the Insurance Core PrinciplesInsurance Core Principles

Washington – 4 May 2004Luc Cardinal – Member of Secretariat

International Association of Insurance Supervisors (IAIS)Website: www.iaisweb.org

IAIS standards setting activities and the Insurance Core PrinciplesIAIS standards setting activities and the Insurance Core Principles 2Luc Cardinal

1.1. IAIS PrinciplesIAIS Principles

• Insurance Core Principles• Supervision of international insurers• Conduct of insurance business• Insurance activities on the internet• Capital adequacy and solvency• Supervision of reinsurers

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2.2. IAIS StandardsIAIS Standards

• Licensing• On-site supervision• Derivatives• Asset management• Group coordination• Exchange of information• Evaluation of the reinsurance cover• Supervision of reinsurers

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3.3. IAIS Guidance papersIAIS Guidance papers

• Supervision in emerging market economies• Model memorandum of understanding for

exchange of information• Fit and proper principles and application• Public disclosure by insurers• Anti-money laundering and combating the

financing of terrorism• Solvency control levels• Use of actuaries• Stress testing• Investment risk management

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4.4. IAIS StructureIAIS Structure

Secretariat

Dialogue Group

Secretariat Budget Committee

Education Subcommittee

Emerging Markets Committee Working Group on Observership & Membership Issues

Insurance Laws, Regulations, Practices& Standards Subcommittee

Task Force on Assessment& Implementation of ICPs

Investments Subcommittee Financial Conglomerates Subcommittee

Subcommittee on Enhanced Disclosure Insurance Fraud Subcommittee

Solvency & Actuarial Issues Subcommittee Working Group on Electronic Commerce/Internet

Task Force on Enhancing Transparency& Disclosure in the Reinsurance Sector

Accounting Subcommittee

Reinsurance and Other Forms of Risk Transfer Subcommittee

Technical Committee

Executive Committee

General Meeting

Task Force on the Core Curriculum Project

Task Force on the Revision of the By-laws

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5.5. IAIS Standard SettingIAIS Standard Setting

Core Principles

Core Principles

Principles

Supervisory Standards

Guidance & Issues Papers

Principles

Supervisory Standards

Guidance & Issues Papers

• Pyramidal approach

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6.6. IAIS Document AdoptionIAIS Document Adoption

Working partyWorking party

Technical and Executive CommitteesTechnical and Executive Committees

General MeetingGeneral Meeting

Drafting and consultationDrafting and consultation

Review and approvalReview and approval

Final adoption and publication (hopefully!)

Final adoption and publication (hopefully!)

WP Members WP Members Some Observers Some Observers

IAIS Members & Observers IAIS Members & Observers

√√

IAIS Members & Observers IAIS Members & Observers

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• The first ICPs adopted in October 2000, based on 1997 Insurance supervisory principles

• FSAP (the Financial Sector Assessment Program) started in 1999

• Joint Forum comparison of the core principles in banking, insurance and securities sectors in 2001

• FSAP experiences

• Revision of ICPs

7.7. History of Insurance Core PrinciplesHistory of Insurance Core Principles

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• Code of Good Practices on Transparency in Monetary and Financial Policies (by IMF)

• Code of Good Practices in Fiscal Transparency (by IMF)

• Special Data Dissemination Standard / General Data Dissemination System (by IMF)

• Principles of Corporate Governance (by OECD)

• International Accounting Standards (by IASB)

8.8. 12 key standards for sound financial systems 12 key standards for sound financial systems (by Financial Stability Forum) (by Financial Stability Forum)

• International Standards on Auditing (by IFAC)

• Core Principles for Systemically Important Payment Systems (by CPSS)

• Recommendations for Securities Settlement Systems (by CPSS/IOSCO)

• The Forty Recommendations of the FATF/ 8 Special recommendations Against Terrorist Financing (by FATF)

• Core Principles for Effective Banking Supervision (by BCBS)

• Objectives and Principles of Securities Regulation (by IOSCO)

• Insurance Core Principles (by IAIS)

IAIS standards setting activities and the Insurance Core PrinciplesIAIS standards setting activities and the Insurance Core Principles 10Luc Cardinal

Title Insurance Core Principle

1. Introduction Background, scope, implementation and assessment

2. Conditions ICP 1: Conditions for effective insurance supervision

3. The supervisory system

ICP 2: Supervisory objectives

ICP 3: Supervisory authority

ICP 4: Supervisory process

ICP 5: Supervisory cooperation and information sharing

4. The supervised entity ICP 6: Licensing

ICP 7: Suitability of persons

ICP 8: Changes in control and portfolio transfers

ICP 9: Corporate Governance

ICP 10: Internal control

9.9. Insurance Core Principles (ICP)Insurance Core Principles (ICP)

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Title Insurance Core Principle

5. Ongoing supervision ICP 11: Market analysis

ICP 12: Reporting to supervisors and off-site monitoring

ICP 13: On-site inspection

ICP 14: Preventive and corrective measures

ICP 15: Enforcement or sanctions

ICP 16: Winding-up or exit from the market

ICP 17: Group-wide supervision

6. Prudential requirements

ICP 18: Risk assessment and management

ICP 19: Insurance activity

ICP 20: Liabilities

ICP 21: Investments

ICP 22: Derivatives and similar commitments

ICP 23: Capital adequacy and solvency

10.10. Insurance Core Principles (ICP)Insurance Core Principles (ICP)

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Title Insurance Core Principle

7. Markets and consumers

ICP 24: Intermediaries

ICP 25: Consumer protection

ICP 26: Information, disclosure & transparency towards the market

ICP 27: Fraud

8. AML/CFT ICP 28: Anti-money laundering, combating the financing of terrorism

Annex 1 References

Annex 2 Assessment methodology

11.11. Insurance Core Principles (ICP)Insurance Core Principles (ICP)

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12.12. Implementation of IAIS standardsImplementation of IAIS standards

– Training and seminars

– Implementation tools

– Self assessment

– Provision of Technical Assistance

– Assisting FSAP

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13.13.Cooperation with othersCooperation with others

• Regular discussion amongst supervisors• Joint Forum• Financial Stability Forum• International Accounting Standard Board• International Federation of Accountants• International Association of Actuaries• Financial Stability Institute• The World Bank• IMF

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www.iaisweb.org

14.14. IAIS Website AddressIAIS Website Address