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Future Outlook On Insurance Core Principles (ICPs)

Future Outlook On Insurance Core Principles (ICPs)

The IAIS, endorsed their new Insurance Core Principles (ICPs) in October 2011. These new ICPs herald a new regulatory environment for insurers and supervisors, essentially requiring supervisory regimes worldwide to establish risk-based solvency requirements. This reflects a total balance sheet approach on an economic basis, addressing all reasonably foreseeable and relevant material risks. These solvency capital reforms are supplemented by required enhancements in the role and activities of insurer risk management, which effectively link the front-end processes of accepting and monitoring risk more closely with the overall strategic goals and risk appetite at Board level.

For many jurisdictions, enacting such changes into local frameworks will require significant effort and the impact on the insurance sector is likely to be considerable, especially in less well-developed markets such as Eastern Europe, Africa, the Middle East and many parts of Asia and South America.

The IAIS is developing the ComFrame proposal – a comprehensive supervisory framework for the supervision of internationally active insurance groups (IAIGs) – and in July 2011 presented its initial concept paper. The IAIS has outlined the aims of ComFrame as:

[Post Image Courtesy of Hywards at FreeDigitalPhotos.net]

• Developing methods of operating group-wide supervision of IAIGs in order to make group wide supervision more effective and more reflective of actual business practices;

• Establishing a comprehensive framework for supervisors to address group-wide activities and risks and also set grounds for better supervisory Evolving Insurance Regulation co operation to allow for a more integrated and international approach; and

• Fostering global convergence of regulatory and supervisory measures and approaches. As the international standard setter for insurance, the IAIS has so far developed a generic approach to building a global framework for the supervision of IAIGs, including developing the ICPs (of which some ICPs, such as ICP 23, specifically address group-wide supervision).

Notwithstanding, the IAIS still lacks a multilateral response to the supervision of IAIGs and ComFrame is intended to fill this void Encouragingly, there was generally broad support from IAIS members and observers for the structure and outline presented in the concept paper released in June 2011. Many recognised that ComFrame needs to exist in order to address issues in the supervision of IAIGs and that the project is therefore a significant development in international insurance supervision.

Insurance Law And Practice - ICSI

About Author Mohamed Abu 'l-Gharaniq

when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries.

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