workshop on the insurance core principles iv conference on insurance regulation and supervision in...

Workshop on the Insurance Core Principles

IV Conference on Insurance Regulation and Supervision in Latin America

Punta Cana, May 6-9 2003Makoto Okubo, Advisor

International Association of Insurance Supervisors (IAIS)

Workshop on the Insurance Core Principles 2

2 May 2003Makoto Okubo

Main itemsMain items

I. IAIS Insurance Core Principles (ICPs)

II. Revision of the ICPs

III. Comparison of current and proposed ICPs

IV. Questions



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AssessmentAssessment Standards implementation

Standards implementation

• Self-assessment• Cooperation with FSAP

• Development of tools• Regional seminars• Technical Assistance• Database and analysis

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Standards developmentStandards development

• Core Principles • Standards (principles,

standards, guidance papers and others)

• Programme for reinforcing insurance systems and the ICPs

I. IAIS Insurance Core PrinciplesI. IAIS Insurance Core Principles



• Background

– IAIS established in 1994

– Insurance Supervisory Principles in 1997

– Secretariat set-up in Basel in 1998

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




• Background (cont.)

– The Insurance Core Principles and Insurance Core Principles Methodology in 2000

– Self-assessment programme developed in 2000

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




• Organisation of an insurance supervisor

• Licensing and changes in control

• Corporate governance

• Internal control

• Prudential rules

• Market conduct

• Monitoring and on-site inspection

• Sanctions

• Cross-border business operations

• Outline of the ICPs (adopted in October 2000)

• Coordination, cooperation et confidentiality




• The Workplan

– The Task Force on the Revisions to the Insurance Core Principles and Methodology in January 2002

– A new overall framework in March 2002– Draft for consultation completed by early 2003– A final document for adoption in Singapore in

October 2003

II. Revision to the ICPsII. Revision to the ICPs



• The draft ICPs take into account:

– Members’ experience in completing the self-assessment programme

– The experience of members and international financial institutions in undertaking the FSAP

– The report of the Joint Forum’s working group comparing the core principles in the three financial sectors

– Other comments provided by members and observers




• Introduction

• Conditions for effective insurance supervision

• The supervisory system

• The supervised entity

• Ongoing supervision

• Prudential requirements

• Market and consumers

• Outline of the proposed ICPs

• Anti-money laundering




• More principles are included: – The conversion of what were previously called

“preconditions” into principles to emphasise their fundamental importance to the conduct of effective supervision.

– The inclusion of new areas, for example, market analysis, consumer protection and anti-money laundering.

– The reordering and further breaking down of some principles

III. Comparison of current and proposed ICPsIII. Comparison of current and proposed ICPs



• There are explanatory notes and criteria supporting each principle.

– The criteria are categorised as either essential or advanced to enable assessors and those implementing the principles to make allowances for the nature of the market and state of development in a particular jurisdiction.

– The criteria should be assessed using five categories: observed, largely observed, partly observed, not observed, and not applicable.




Contents Current ICPs Proposed ICPs

I. Introduction Introduction Introduction

II. Conditions for effective insurance supervision

- Covered as Preconditions for effective insurance supervision in Core Principles Methodology

ICP 1: Conditions for effective insurance supervision

III. The supervisory system

ICP 2: Supervisory objectives

Principle 1: Organisation of an Insurance Supervisor

ICP 3: Supervisory authority

- covered in Principle 1 ICP 4: Supervisory process

Principle 16: Coordination and Cooperation

ICP 5: Supervisory cooperation and information sharing

Principle 17: Confidentiality - Covered in the ICP 3





IV. The supervised entity

Principle 2: Licensing ICP 6: Licensing

-See Principle 2 ICP 7: Suitability of persons

Principle 3: Changes in Control ICP 8: Changes in control and portfolio transfers

Principle 4: Corporate Governance ICP 9: Corporate Governance

Principle 5: Internal Controls ICP 10: Internal control

III. Comparison of current and propsed ICPsIII. Comparison of current and propsed ICPs




V. On-going supervision

ICP 11: Market analysis

Principle 12: Financial Reporting ICP 12: Reporting to supervisors and off-site monitoring

Principle 13: On-site Inspection ICP 13: On-site inspection

ICP 14: Intervention

Principle 14: Sanction ICP 15: Enforcement or sanctions

ICP 16: Winding-up & exit from the market

Principle 15: Cross-border Business Operations

ICP 17: Group-wide supervision





VI. Prudential requirements

ICP 18: Risk assessment and management

ICP 19: Insurance activities

Principle 7: Liabilities ICP 20: Liabilities

Principle 6: Assets ICP 21: Investments

Principle 9: Derivatives and ‘off-balance sheet’ items

ICP 22: Derivatives and similar commitments

Principle 8: Capital Adequacy and Solvency

ICP 23: Capital adequacy and solvency





VII. Markets and consumers

Principle 11: Market Conduct ICP 24: Intermediaries

ICP 25: Consumer protection

ICP 26: Information, disclosure & transparency towards the market

ICP 27: Fraud

VIII. Anti-money laundering

ICP 28: Anti-money laundering

(deleted) Principle 10: Reinsurance - See ICP 19 & 20- It is also noted that the ICPs now apply to

reinsurers as well as insurers




Please discuss the following questions in your group and make a brief presentation. (5 minutes for each group)

1) Any comments on proposed ICPs

2) Peer review exercises on ICP13: on-site inspection

V. QuestionsV. Questions

References1) Introduction to the Workshop on 8 May 2003 2) Comparison of current and proposed ICPs

(draft – 24 April 2003)3) Revised ICPs (draft – 31 January 2003) 4) Assessment methodology (draft – 28 February 2003)5) Peer review exercises

workshop on the insurance core principles iv conference on insurance regulation and supervision in...

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