International Insurance
Regulatory Issues
10th Annual Insurance Public Policy Summit
“Confronting New Challenges in U.S. and International
Regulation”
Andrés Portilla
Director, Regulatory Affairs Department
March 12, 2014
List of Current IIF Insurance Members
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Currently
the IIF has 19 insurance members headquartered in 10 countries, including all 9 GSIIs designated in July 2013:
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Swiss Re
Zurich Insurance Group
Allianz SE
Prudential Financial
AIG
MetLife
Generali
AXA Group
Ping An Insurance
Principal Financial Group
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Prudential plc
Manulife Financial
Reaseguradora Patria
Aflac
China Taiping Insurance Group Co.
Aegon N.V.
China Life Insurance (Group)
Aviva plc
MassMutual Life Insurance Company
The Global Framework
G20 Countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia,
Italy, Japan, the Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the
United Kingdom, EEUU and the European Union
G20
FSB
(Financial Stability Board)
BCBS
IOSCO
IAIS
(Basel Committee on
Banking Supervision)
(International Organization
of Securities Commissions)
(International Association
of Insurance Supervisors)
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International Regulatory Agenda
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One key objective: to develop a harmonized, globally consistent
regulatory framework for internationally active insurance groups
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Two key players: Financial Stability Board (FSB) and the IAIS
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Three main projects:
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Basic Capital Requirement (BCR)
ComFrame (Common Framework for the Supervision of IAIGs)
Global Insurance Capital Standard (ICS)
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Global Insurance Regulatory Framework Overview
ICPs
ComFrame
expands on ICPs
All Insurers
ComFrame
Capital Adequacy
Component of
ComFrame
Step 3: ICS
(to be developed by
end of 2016)
Step 2: HLA(to be
developed by end
of 2015)
Step 1: BCR
(to be developed by
end of 2014)
IAIGs
G-SIIs
Recovery and
Resolution
G-SII Policy
Measures
Enhance Groupwide Supervision
BCR
HLA
ICS
ComFrame
ICPs
Apply to G-SII
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Apply to IAIG
TBD
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Apply to All Other Insurers
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Global Systemically Important Insurers(G-SIIs)Policy Measures Overview
Introduction
On July 18, 2013, IAIS announced that
it had developed a framework of policy
measures for; however, the proposed
HLA measures will be subject to
further consultation before they are
finalized in 2015 in advance of the
proposed implementation date of 2019.
Implementation Timeline
Time
July 2013
Action
Designation of the first G-SII cohort
July 2014
Crisis Management Groups (CMG) to be
established for the first G-SII cohort
July 2014
Systemic Risk Management Plan (SRMP) to be
completed
End 2015
IAIS to develop implementation details for HLA
that will apply to designated G-SIIs starting from
2019
November
2017
The FSB to designate the cohort of G-SIIs,
based on the IAIS methodology and 2016 data,
for which the HLA policy measure will apply,
with implementation beginning in 2019
January 2019
G-SIIs designated in November 2017 to apply
the HLA requirements
Components
Components
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EnhancedSupervision
Supervision
Enhanced
Recoveryand
andResolution
Resolution
Recovery
HigherLoss
LossAbsorbency
Absorbency
Higher
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Basic Capital Requirements(BCR) and Higher Loss Absorbency(HLA)
BCR
HLA
As a foundation for HLA requirements for G-SIIs,
the IAIS will develop straightforward, basic capital
requirements to apply to all group activities,
including non-insurance subsidiaries. The BCR is
intended to balance between simplicity and risk
sensitivity, as well as provide a more comparable
foundation for the HLA than local capital
requirements.
Based on the foundation of the BCR, the higher loss
absorbency requirements will focus on systemic risks and
non-traditional non-insurance (NTNI) activities as the
second step towards the ICS. The HLA will be
completed in 2015 and implemented to G-SIIs from
2019.
BCR 2014 Development Timeline
BCR Field
Testing Starts
Jan
Feb
Mar
BCR Field
Test Ends
Apr
First BCR Consultation
Ends
May
Expert Inputs
Concludes .
IAIS approves
Second BCR
BCR Proposal
Consultation Starts
Jun
Jul
Aug
Sep
Analysis on Field Test
Results Concludes.
Second BCR Consultation
Ends
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G20 Endorses
BCR Proposal
Oct
Nov
FSB Reviews
BCR Proposal
Dec
Common Framework for the Supervision of Internationally Active Insurance
Groups (ComFrame)
Introduction
Three Modules of ComFrame
ComFrame is a set of international supervisory
requirements focusing on the effective groupwide supervision of IAIGs. ComFrame is built
and expands upon the high level requirements
and guidance currently set out in the IAIS ICPs,
which generally apply on both a legal entity and
group-wide level.
ComFrame consists of the following three modules:
• Module one: The Scope of ComFrame
• Module two: The IAIG (including capital adequacy
requirements)
• Module three: The Supervisor (including establishment
of supervisory colleges)
ComFrame Development Timeline
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Global Insurance Capital Standards(ICS)
Introduction
Development Steps of the ICS
On October 9, 2013, the IAIS announced
that it is committed to develop a risk based
ICS by the end of 2016, followed by a twoyear period of testing and refinement with
supervisors and IAIGs. The ICS is scheduled
to be implemented beginning in 2019.
After completion, the ICS will be included in
ComFrame replacing the content of Module
2 Element 5 Capital Adequacy Assessment.
The IAIS has committed to develop the ICS in the following
three steps:
• The first step is to develop ICS by end 2016.
• The second step is to test and refine the framework by
2018.
• The third step is to implement it globally starting in 2019.
ICS Development Timeline
Institute of International Finance
International Insurance
Regulatory Issues
10th Annual Insurance Public Policy Summit
“Confronting New Challenges in U.S. and International
Regulation”
Andrés Portilla
Director, Regulatory Affairs Department
aportilla@iif.com