The International Association of Insurance Supervisors (“IAIS”) has reached agreement on a unified path to convergence of group capital standards in furtherance of its ultimate goal of a single insurance capital standard (“ICS”) that achieves comparable outcomes across jurisdictions.
The IAIS said in a statement that this agreement responded to a call from members and stakeholders for more clarity on what the implementation of ICS Version 2.0 would mean in practice.
Vicky Saporta, chair of the IAIS executive committee, said, “By reaching this agreement, the IAIS will achieve its aim of creating a common language for supervisory discussions of group solvency. We have reflected the priorities of our members and made significant progress towards our ultimate goal.”
The IAIS has agreed that implementation of ICS Version 2.0 would be conducted in two phases – a five-year monitoring phase followed by an implementation phase. Implementation of ICS Version 2.0 also would have two equally important components.
The first is mandatory confidential reporting by all internationally active insurance groups of a reference ICS.
The second is additional reporting, at the option of the group-wide supervisor.
Following the announcement by members from the United States of development of an aggregation-based group capital calculation, the IAIS further agreed to collect data to allow it to assess by the end of the monitoring period whether or not the aggregation method provides comparable outcomes to the ICS.
Ted Nickel, the insurance commissioner of Wisconsin and the president of the National Association of Insurance Commissioners (“NAIC”), said, “This is a remarkable accomplishment, achieved through a lot of give and take. It has been said that it is always darkest before the dawn and with this path forward on Version 2.0, we have our dawn. We look forward to continuing to be part of the important work ahead.”
Hiroshi Ota, deputy commissioner for international affairs at the Japan Financial Services Agency and vice chair of the IAIS executive committee, said, “Despite coming from different economies and societies, with this agreement we have once again shown how our members can come together to accomplish great things. While members have at times expressed different opinions, our aim has been the same – to help the insurance market be more stable and resilient while continuing to look forward.”
Gabriel Bernardino, chair of the European Insurance and Occupational Pensions Authority (“EIOPA”), said, “This agreement achieves the clarity we needed for the way forward. When we reach the ultimate goal, we will look back on the agreement forged in Kuala Lumpur as a watershed moment in the development of the ICS.”
Learn more: www.iaisweb.org.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].