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Application of Insurance Core Principles ICPs

Application of Insurance Core Principles ICPs

The ICPs apply to Insurance Regulation in all jurisdictions regardless of the level of development insurance markets and the type of insurance products or services being regulated. Supervisors should have the flexibility to tailor supervisory requirements in accordance with nature, scale and complexity of individual insurers and actions so that they are commensurate with the risks posed by individual insurers as well as the potential risks posed by insurers to the insurance sector or the financial system as a whole.

The ICPs apply to the regulation of all insurers whether private or government-controlled insurers that compete with private enterprises, wherever their business is conducted, including through e-commerce.

Where the principles do not apply to reinsurers, this is indicated in the text. The ICPs do not normally apply to the regulation of intermediaries but where they do, this is specifically indicated.

Insurance supervision within an individual jurisdiction may be the responsibility of more than one authority.

For example, the body that sets out the legal framework for insurance supervision may be different from the body that implements it.

The regulator must operate in a transparent and accountable manner. It needs legal authority and the regulator to perform its tasks. The regulator must recognise that transparency and accountability in all its functions contribute to its legitimacy and credibility. The regulator should also establish clear timelines for public consultation and action, where appropriate.

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Application of ICPs and standards to group-wide supervision

The ICPs and standards apply to the regulation of insurers at the legal entity and the insurance group level, unless otherwise specified. The application of individual ICPs and standards to insurance groups may vary and where appropriate, further guidance is provided under individual ICPs and standards.

It is recognised that the implementation of the ICPs and standards relevant to group-wide regulation may vary across jurisdictions depending on the regulatory powers and structure within a jurisdiction. There are direct and indirect approaches to group-wide regulation.

Under the direct approach, the regulator has the necessary powers over the parent and other entities in the insurance group and can impose relevant regulatory measures directly on such entities, including non-regulated entities. Under the indirect approach, regulatory powers focus on the insurance legal entities and regulatory measures are applied to those insurance legal entities to address the group-wide risks posed by other entities within the group, including non-regulated entities. There may also be different combinations of elements of the direct and indirect approaches.

Regardless of the approach, the regulator must be able to demonstrate that in effect, the outcome is similar to having the regulatory requirements applied directly on those entities within the insurance group from which the risks are emanating. This is to ensure effective group-wide supervision, which includes ensuring that all relevant group-wide risks impacting the insurance entities are addressed appropriately.

Insurance Law And Practice - ICSI
Application of Insurance Core Principles ICPs Application of Insurance Core Principles ICPs Reviewed by Blog Editor on Tuesday, May 16, 2017 Rating: 5

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