The International Association of Insurance Supervisors met in Grand Cayman last week for one of its three global meetings per year.
The IAIS is the standard setter for the core principles of insurance supervision and one of three international organisations, together with the Basel Committee on Banking Supervision and the International Organisation of Securities Commissions, that informs the G20 via the Financial Stability Board of matters regarding financial stability, said Gordon Rowell, head of insurance at the Cayman Islands Monetary Authority, which hosted the event.
The global seminar allowed insurance supervisors and industry representatives to discuss globally significant matters impacting the insurance sector, as well as gain knowledge on current international standards. “The purpose of the meetings was to discuss updates on all the projects that are undergoing, ratify budget decisions, feed back to members what the FSB and G20 have been saying about the insurance sector,” Mr. Rowell said.
The programme included panels on the revisions to the IAIS’ Insurance Core Principles that were adopted in October 2011 and how the IAIS is enhancing observance of the core principles through a series of self-assessments and peer reviews, as well as on the Common Framework for the Supervision of Internationally Active Insurance Groups or ComFrame, its objectives, schedule of development and the strategic direction on capital adequacy and other solvency-related items.
Desmond Smith, president of the International Actuarial Association, delivered a presentation on the IAA and its development of International Standards of Actuarial Practice. Craig Thorburn of The World Bank and Henry Yan from the Access to Insurance Initiative discussed the importance of financial inclusion and access to insurance, especially in emerging markets, and how it contributes to financial stability.
This was complemented by technical meetings of different IAIS committees that are contributing to standard setting and the implementation of insurance supervision in member countries.
“We are pleased once again to have enjoyed the participation of so many of our members and observers at this signature event,” said Peter Braumüller, chairman of the IAIS Executive Committee. “The issues examined during the global seminar carry great importance to our members and observers, and the insurance sector as a whole, and we are grateful for the opportunity to further their discussion. I would also like to thank our gracious host, the Cayman Islands Monetary Authority, for the support they have provided the Association in helping put on this event.”
To hold the event in an offshore financial centre such as the Cayman Islands is a reflection of the inclusiveness of the 190 member organisation, which goes to where its members are, Mr. Braumüller said. “We are depending on invitations and it is not easy to host such an event,” he said. “We think offshore jurisdictions play a major part. There have been a lot of misunderstandings about the level of supervision in offshore jurisdictions. I think we have contributed to raising awareness.”
The IAIS objective is to deliver insurance supervision standards worldwide, Mr. Braumüller said. “We meet three times a year with the main committee meetings to bring things forward, to discuss events and new standards. We have big and small countries, we have onshore and offshore and we have [members at] different stages of development. What we want to do is to achieve our goals globally: consumer/policyholder protection, a safe and stable insurance market and also contribute to financial stability.”
At the global seminar, Mr. Braumüller discussed the IAIS’ proposed assessment methodology to identify global systemically important insurers and how the IAIS is addressing macroprudential surveillance priorities.
The IAIS recently released its proposed assessment methodology for the identification of global systemically important insurers, or G-SIIs, for a two-month public consultation. The objective of the methodology is to properly account for the particularities of the insurance business model. In its November 2011 report ‘Insurance and Financial Stability’, the IAIS outlined there is little evidence that the traditional aspects of insurance generate or amplify systemic risk within the financial system or the real economy. Therefore the proposed IAIS methodology attempts to predominantly capture the activities of insurance companies that are non-traditional, non-insurance and connected to the financial markets.