Asociación de Supervisores de Seguros de América Latina
Latin-American Association of Insurance Supervisors
Project Proposal for a Regional
Insurance Supervision Leadership
Program:
A FIRST submission
January 2004
Page 1 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
Latin-American Association of Insurance Supervisors (ASSAL)
has
developed this proposal for an initiative comprised of the following two
components:
(1) a one-week program to strengthen supervisory leadership skills,
helping bank supervisors in their efforts to achieve compliance with
international standards; (2) a program assessment and evaluation(PIR) .
The proposal seeks a contribution of $174,980.00 USD to cover design,
development, delivery and evaluation of the initiative.
This proposal is submitted by:
……………………………………………………
Date ………………………
Page 2 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
Table ns
TABLE OF CONTENTS
I.
Proposed Project … …………………………………………….……..…….4
Project Background …………………………………………………..… 5
Project Description……………………………………………………..…6
Project Focus………………………………………………………….…...7
Phase I – One week leaderhsip session …………………..……7
Phase II – Program Assessment & Evaluation ………………10
Summary of Proposed Budget …………………………………10
II.
Relationship with IFIs/donor and other funding agencies…………….12
III.
Other Donors …………………………………………………………….……12
APPENDIX I: Background on ASSAL ………………………………………..…13
APPENDIX II: Project Assessment Process
………………………………..…15
APPENDIX III: Background on The Toronto Centre …..………………………17
APPENDIX IV: Program Agenda ………………………………………..………. 19
Page 3 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
I.
PROPOSED PROJECT
The Regional Insurance Leadership Development Program will be hosted by the LatinAmerican Association of Insurance Supervisors (ASSAL)1 in Mexico City, Mexico and will be
designed for the ASSAL’s senior executives in financial sector supervision.
The project is being proposed by:
The Latin-American Association of Insurance Supervisors
Executives:

Luis Armando Montenegro
Chairman of the Executive Committee of the Latin-American Association of
Insurance Supervisors (ASSAL) and
Superintendence of the Financial System, (SSF-El Salvador)
e-mail: amontenegro@ssf.gob.sv

Manuel Aguilera-Verduzco
Chairman of the Solvency Guidelines Working Group of ASSAL (GES)
Chairman of the Executive Committee of the International Association of
Insurance Supervisors (IAIS)
President of the Insurance and Surety National Commission (CNSFMéxico))
e-mail: maguilera@cnsf.gob.mx
Other Contact names:
1

Lillian Larrain Egusquiza
ASSAL Secretariat (SVS-Chile)
e-mail: assal@svs.cl
phone: (562) 473-4513

Norma Alicia Rosas
Vice-President of Analysis and Industry Studies of the Insurance and Surety
National Commission (CNSF-México)
e-mail: nrosas@cnsf.gob.mx
phone: (52-55) 57-24-75-96
For further information on ASSAL please refer to Appendix I on pages 13-14.
Page 4 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
Project Background:
Markets’ globalization and economies’ liberalization have been the main features of the
structural reforms implemented since the 1980’s. This process has opened the domestic
insurance industry to new participants by removing foreign investment, financial and managerial
constraints. Latin America has implemented a broad range of macroeconomic stabilization
efforts and structural reforms that transformed the economic environment radically.
Domestic insurance industry opening has brought many changes in the market’s structure, such
as sound competition, new products and novel commercial practices, modern technology for
insurance business, access to new and non-traditional markets and lower concentration levels.
Thus, the new economic environment makes it necessary to implement new regulation and
supervision schemes based on internationally accepted best practices and standards. Such
measures should be designed to look after the companies’ financial soundness and stability,
stimulate self-regulation, protect the insured interests and contribute to the financial stability
both at the national and international levels.
In spite of their economic difficulties, virtually all the countries in the region keep implementing
the structural reforms instituted in earlier years. Nearly all of the region’s countries promoted
major fiscal or tax reforms, discussed significant transformations in their social security systems
and had major progress in privatization programs. Some of the countries had legislative reforms
that involved their financial systems in order to promote competition.
It has been mentioned before that there has been a sound reaction by Latin American countries
concerning the two underlying factors of financial strength:
1) macroeconomic stability; and
2) prudential regulation and supervision reforms.
Many countries in the region follow insurance prudential policies such as minimum capital
requirements and/or the submission of a business plan or a similar document so that an
operating license can be issued. However there is still a great deal of work ahead.
Objectives of the ASSAL:
In developing the financial sector in Latin America, significant investments in human capital
have been made towards strengthening the banking and capital markets sectors.
Comparatively, less financial support has been provided to educate and inform both the public
and private sector on the critical role which the insurance sector plays in developing financial
markets in the region.
Insurance supervisors occupy a pivotal role between the regional governments and the private
sector and therefore could be a catalyst in the development of markets in the region. By
providing a systematic and structured approach to developing supervisors in the region, some
sustainable results would be that:
 The supervisors would increasingly strengthen their own processes and approaches to
supervision in line with international regulatory standards;
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January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
 The strengthening of supervision in the region, could in the long-term, lead to an
increased confidence in Latin American markets and this could serve to stimulate a flow of
foreign investments in the region;
 The strengthening of domestic insurance companies would be facilitated through the
increased flow of investment and the capacity of supervisors to assess the operations and
risks of the institutions they regulate;
 Linked to the above-given result is the increased ability of domestic companies to
introduce new products that would be accessible to lower income segments of the
markets in the region;
 The platform to introduce a more prominent actuarial practice in the insurance sector
across the region;
 The ability to develop alternate investment options and vehicles such as annuities and
pension plans in the region; and
 The ability to develop an understanding of the products, tools and response strategies
needed to deal with natural disasters in the region.
Project Description:
The phases and objectives of the proposed project are:
1. A one-week insurance supervision leadership development program: designed to
create among senior level insurance supervisors of ASSAL, a shared mindset in the
application of the key competencies of initiating and managing change and persuasion
as well as competencies such as decision making, effective judgement and problem
solving to address critical issues that ASSAL faces in their respective jurisdictions. It is
estimated that 20-24 individuals will participate in this program.
The intention would be to use cases describing real-life situations from the insurance
sector of different jurisdictions for the one-week leadership program to simulate problem
solving and decision-making on issues critical to the Latin American context.
2. Program Evaluation and Assessment: designed to provide the ASSAL and FIRST
with information on the enablers or barriers to the implementation of change agencies
that participated in the insurance supervision program. For a summary of the objectives
and process of this assessment please refer to Appendix II given on page 15.
Page 6 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
Project Focus:
Phase I:
ASSAL has identified the following technical, operational and leadership issues which leaders
in the region need to address. These are summarized below:
1. Development of prudential regulation








2.



3.





Corporate governance
Internal controls
Risk management
Asset valuation
Investments regulation
Technical provisions constitution and valuation
Capital and solvency requirements
Reinsurance regulation
Development of other insurance regulatory and supervisory issues
Consumer protection issues
Data gathering and public disclosure of information
Other special issues (e.g. financial reinsurance and alternative risk transfer,
guarantee funds, health insurance, financial convergence and consolidated
supervision, money laundering, transparency).
Skills development and supervisory knowledge
Actuarial and technical issues
General Accepted Accounting Principles and Standards
Auditing practices
Policy making with an emphasis on political and legislative changes
Legal protection for supervisors
4. Skills development in human capacities
 Leadership for managing change, institutional development and crisis management
 Problem solving and effective judgment in dealing with troubled institutions
 Promoting a level playing field in the financial sector
Of the issues listed above, ASSAL has been working with the IAIS to develop programs that deal
with the technical and operational themes identified above. In its collaboration with the Toronto
Centre2, ASSAL proposes to develop and run a one-week leadership program that focuses on
developing the competencies of managing change, problem solving and the effective use of
2
For further information on the Toronto Centre please refer to Appendix III on pages 15-16.
Page 7 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
judgement. There will be a seamless integration of these competencies with key supervisory
themes identified by ASSAL.
Proposed Phase I Budget
The one-week leadership program will provide a mix of:

Full day interactive case studies;

Vignettes or mini case studies;

Special presentations; and

Action planning.
The case studies and vignettes are led by world-class supervisory leaders – former heads of
supervisory agencies and other internationally recognized experts. For this program, two
agendas have been proposed. They cover different supervisory issues identified by ASSAL.
Role-play simulations are an integral part of the one-week leadership program in which
participants take the part of the decision-makers and develop appropriate approaches to deal
with issues.
The one-week session will also allow participants to work on their own identified supervisory
challenges by developing action plans to deal with specific issues in their respective countries.
The action plans are presented on the final two afternoons of the session, with valuable insights
and perspectives provided by program leaders and peers, through written comments.
To sustain the learning process and networking engendered in the one-week leadership
sessions, participants will become Associates of the Toronto Centre and will have access to
the Associates Program – a continuing education and networking initiative. The Associates
Program allows participants to “keep in touch” through monthly e-mail announcements, an
Associates-only web site, conference presentations and workshops, “special topic” papers
available on the Toronto Centre website, and through a quarterly newsletter.
Based on the themes identified by ASSAL, The Toronto Centre has proposed an agenda that is
given in Appendix IV on page 17.
Proposed Phase I Budget
The estimated costs to the FIRST Initiative are summarised in three sections that reflect the
phases of the project. Project costs include consulting fees, travel, meals and accommodation
for Toronto Centre Program Leaders and a facilitator as well as core development, delivery
(travel, meals and accommodation), project management and evaluation costs of the Toronto
Centre.
It is assumed that ASSAL will underwrite, the costs associated with:

Translation of all content to Spanish and simultaneous translation at the programs;

Conference facilities and equipment for all programs;

Any other local costs associated with the project.
Page 8 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
ITEM
DETAILS
1
Fees for Program Leaders
4 Program Leaders consulting and
travel days @US$1200 per diem for
32 days in total
2
Return airfare for Program
Leaders
4 Program Leaders travel: from
North America (4 @ $1,500)
3
Return airfare for 20
participants
20 participants travel: Latin America
@ US$ 800 each
4
Fee for facilitator
One week at program plus travel
and preparation time
6,500
5
Return airfare for
facilitator
Business class airfare from Canada
1,500
6
Return airfare for 1
Toronto Centre staff from
Canada
Program Manager
1,500
7
Customization of all cases
and vignettes
Fees for case writer, editor and
Program Leader
10,000
8
Printing and shipping of
course material
Estimate based on material for 20
participants
10,000
9
Accommodations and
meals: Program Leaders,
facilitator and TC staff
9 individuals @ USD$350 per night
for 6 nights
18,900
10
Accommodation for
participants
20 individuals @ USD$1003 per
night for 7 nights
14,000
9
Program Evaluation
Program Evaluator
10
Project Management
Project Manager
Sub-Total
Contingency (10%)
FIRST Funding
3
COSTS
(USD)
$38,400
6,000
16,000
5,000
10,000
$137,800
13,780
151,580
Members of ASSAL will provide part funding for meals and accommodation.
Page 9 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors (ASSAL)
PROPOSAL – FIRST INITIATIVE
Phase II:
The Program Evaluation and Assessment component of the initiative is designed to assess
the residual progress made by participants in implementing the changes they identified through
the action planning process. The assessment of action plans will be conducted by Program
Leaders who were at the leadership session. A structured telephone interview process will be
used to:

Determine whether participants have been able to practice or transfer any new leadership
behaviours such as persuasion and stakeholder management in their daily roles;

Ascertain if participants in a given program were able to implement the Action Plans
developed during a one-week leadership process;

Understand the enablers and/or barriers that participants face in implementing their
Action Plans; and

Identify the benefits derived in the supervisory agency or system from implementation of
the Action Plan.
Proposed Phase II Budget:
The estimated costs of the services are given below:
EVALUATION ACTIVITES
ESTIMATED COSTS
(US)
Consulting Days (14 @ $1200USD per diem)
16,800.00
Follow up communication costs by paid program leaders
on Post Session Mentorship Plan
3,000.00
Report Writing (3 @ $1200USD per diem)
3,600.00
TOTAL COSTS
23,400
SUMMARY OF PROPOSED BUDGET:
Project Phases
Budget
One Week Leadership program
151,580
Post-Implementation Review
23,400
TOTAL COSTS
174,980
Page 10 of 19
January 21, 2004
Latin-American Association of Insurance Supervisors
(ASSAL)– FIRST INITIATIVE
What are you hoping the technical assistance will achieve? What will be
improved?
The one-week regional insurance session is designed to provide participants with the
leadership competencies of change management, persuasion, problem solving,
decision-making and strategic planning, over and above the technical skills they
already possess. The aim is to empower senior supervisors with the capacity to
strengthen the supervisory systems of member states of ASSAL thereby contributing
to the development of sound insurance supervisory structures and a more effective
financial system.
How will FIRST be able to determine whether the proposed project has been
successful?
The action plans that each participant will be asked to work on as well as the
program assessment and evaluation will help to answer this question. As a condition
of receiving funding, ASSAL members will be asked to report at predetermined
intervals on the progress of their action plans.
Is the recipient institution willing to contribute to the cost of the project,
financially or in kind?
Yes.
If so, provide an indication of your proposed contribution.
The in-country administration and logistical arrangements will constitute the
contributions of all phases of the project. Additionally, the host will provide:

Translation of all course materials;

Simultaneous translation during in-house sessions

The printing of cases, vignettes, PowerPoint presentations and certificates for all
sessions;

Local transportation for the Program Leaders, TC Staff and facilitators.
Is the success of the project reliant on another project or other event taking
place before or afterwards? If so, please provide details.
No.
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Latin-American Association of Insurance Supervisors
(ASSAL)– FIRST INITIATIVE
II.
Relationship with IFIs/donor and other funding agencies
Does this proposed project arise out of recommendations arising from World
Bank/IMF Financial Sector Assessment Program (FSAP) or Reports on
Observance of Standards and Codes (ROSC)?
Yes. ASSAL to provide details
If the country has not already participated in an FSAP or a ROSC relevant to the
proposed technical assistance, when is it likely to do so (please provide an
estimate, if possible, if a formal date has not yet been set – it is not necessary
for a date to have been agreed for FIRST to provide technical assistance)?
ASSAL to provide details
III.
Other Donors
Provide details of technical assistance providers and/or their funding agencies
that have worked with the recipient institution in the last three years who may be
contacted to discuss the proposed project.
ASSAL to provide details.
Provide the details of any other funding agencies/institutions, which have
already been approached in connection with this project proposal, and their
responses.
The IMF has been approached to provide support in kind for the delivery of part of the
course materials to be used in the one-week program. The approximate value of this
support is $8,000.00USD.
Page 12 of 19
January 21, 2004
APPENDIX I: BACKGROUND OF ASSAL
The Latin-American Association of Insurance Supervisors (ASSAL) is an
international organization that brings together the main Latin-American authorities
responsible for supervising and regulating the local insurance markets. It was formed
in 1979 during a meeting of Latin-American Insurance Supervisors, when it was
recognized that there was a need for a forum to encourage a regular networking and
exchange of experiences among the region’s insurance supervisors.
The membership of ASSAL is comprised of representatives of the insurance
supervisory authorities of the following 20 Latin American countries:
Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay,
Peru, Puerto Rico, Dominican Republic, Uruguay and Venezuela. Spain and
Portugal are associate members.
However, it was not until June 1991 that ASSAL began to acquire a solid regional
presence based on the work and cooperation among its members and the
emergence of a broader set of objectives, including the following:

To exchange information on legislation, regulatory control, statistics, market
characteristics and operational systems in each country regarding insurance
and reinsurance activities;

To compile and publish regional data, as well as any general information that it
is of interest for its members, and for supervised organizations;

To harmonize supervision policies and mechanisms, set the basic
nomenclatures for the accounting and statistical systems of the insurance
institutions, through the development of general criteria and the use of
international standards, with the aim of adopting an homogenous system
based on the country members’ experiences;

To study, analyze and identify conflict areas, as well as to prepare relevant
topics for the insurance industry, in order to support a better management in
each supervision body;

To organize educational programs specialized in insurance and reinsurance
topics for the training of the supervision agencies’ staff in order to improve the
institutions’ supervision methods and techniques;

To create a balance between policy and supervisory mechanisms;

To make available Country members’ experiences regarding specific issues of
the insurance industry;

To promote the members’ participation in international forums.
Page 13 of 19
January 21, 2004
APPENDIX I: BACKGROUND OF ASSAL
In pursuing its objectives, the Association has created three working groups, focusing
on issues related to education, communications, and the development of supervisory
guidelines.
1. The Solvency Guidelines’ Working Group (GES) is responsible for
developing and drafting the papers in which the Association establishes its
recommended policies and guidelines for insurance supervision in the region,
based on the international standards produced by the International Association
of Insurance Supervisors (IAIS).
2. The Education Working Group organizes training seminars for insurance
supervisors of the member countries. Industry representatives and other
insurance practitioners are also invited.
3.
The Exchange of Information Working Group is responsible for maintaining
and updating the region’s statistical and legal database.
Because of the interests of the members, the demands for information and support
and for training and education programs, during the Annual Conference - 2002 that
took place in Honduras, the General Membership of ASSAL decided to create a
permanent Secretariat to handle the day-to-day affairs of the Association and its
working groups. Up to day, ASSAL’s permanent Secretariat is composed of one halftime person, in addition of personnel of the Insurance and Securities
Superintendence (SVS) devoted to international issues.
Page 14 of 19
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APPENDIX II: PROJECT ASESSMENT PROCESS
Page 15 of 19
January 21, 2004
APPENDIX III: BACKGROUND OF THE TORONTO CENTRE
THE TORONTO CENTRE
The Toronto Centre was founded in 1998 by the Canadian Government, the World Bank, and
the Schulich School of Business at York University in Toronto, in response to the perceived
need for the development of effective leadership in the regulation and supervision of banking,
insurance, and securities markets. The Toronto Centre has received financial support from
the Bank for International Settlements (BIS) and Canadian banks. It continues to receive
core support from the Canadian International Development Agency and the IMF; project
support from the Inter-American Development Bank (IDB), USAID, international accounting
firms and other organizations; and support in-kind from the World Bank, the Office of the
Superintendent of Financial Institutions (OSFI) and the Schulich School of Business. The
Toronto Centre works in close collaboration with the Financial Stability Institute of the BIS to
deliver joint programs, and it organizes regional and country programs with local partners.
Toronto Centre programs help supervisors identify and develop the skills they need to
successfully overcome supervisory and regulatory challenges and strengthen the regimes in
their various countries. The Centre uses a case study approach led by world-class
supervisory leaders, drawing on their own experiences of dealing with supervisory
challenges and responses. Through its programs, the Toronto Centre is making a unique
contribution to greater financial sector stability in the many countries participating in the
programs. Financial institutions operating in these countries will benefit not only from
increased stability but also from more effective application of international supervision
standards.
Curricula of Toronto Centre programs are developed so as to help supervisors to more
effectively:




Strengthen their own agencies’ capacities to perform according to international
standards of supervision (Core Principles) and to deal effectively with troubled
financial institutions;
Work with governments and others to create and maintain an effective legislative and
regulatory framework for financial sector supervision;
Work with industry managements, boards of directors and others (including media) to
promote and gain support for sound industry practices;
Network with their peers, and with Toronto Centre program leaders, to identify and
resolve supervisory issues that they face in their on-going work.
Since its establishment in 1998, the Toronto Centre has provided leadership training to over
900 senior banking, insurance and securities supervisors from over 115 countries. In the field
of banking supervision, the Centre has organized 13 sessions in Toronto and 6 special topic
sessions with the FSI in Basel, Nassau, Bahamas, and Qatar -- the second for the Caribbean
Group of Bank Supervisors and the latter for the Gulf States Banking Supervisory Group.
The Toronto Centre also partners with ASBA in Latin America, SEACEN in Asia, ESAF in
Africa, amongst others to organize sessions for regional groups of bank supervisors.
In 2001, at the invitation of the Banco Central do Brasil, the Toronto Centre organized its first
country program in Brazil, for the 29 most senior bank supervisory executives. This was
followed in 2002 with a specially designed session for emerging leaders. Discussions are
underway with a number of authorities for individually customized country programs.
Page 16 of 19
January 21, 2004
APPENDIX III: BACKGROUND OF THE TORONTO CENTRE
THE TORONTO CENTRE’S APPROACH TO ADULT LEARNING
The Toronto Centre incorporates a number of key adult learning approaches in its leadership
sessions. These include:

Leadership Competencies: Internationally accepted models are used to develop
leadership skills; specifically, John Kotter’s leading change model and Jay Conger’s art of
persuasion and stakeholder analysis framework.

Interactive case study simulations: Case studies are designed to apply leadership
skills to actual regulatory situations and are presented by current and former regulators
(Program Leaders) who were actually involved in the situations presented. The case
study approach enhances participants’ ability how to:


Identify and manage relationships with relevant stakeholders;
Use strategic planning to implement necessary actions;

Understand and work with country-specific public and private sector
governance arrangements and relationships.

Vignettes: Vignettes are situational “snapshots” of a supervisory issue(s). They are
designed to apply leadership skills to hypothetical regulatory situations and are presented
by highly experienced current and former regulators. The vignettes are designed to meet
the same objectives identified for interactive case study simulations.

Special Topic Presentations: Leaders in financial sector oversight are invited to deliver
informal presentations on topical supervisory issues that are not covered in the case
studies or vignettes. The presenter is usually someone of international renown and
experienced in supervision; and

Action Planning: Action Planning is a process used to reinforce leadership skills
development during a one-week session. Participants develop action plans to deal with a
specific supervisory challenge in their own countries. Throughout the week at a Toronto
Centre session, participants have the opportunity to review and refine their plans through
consultation with their peers and with Program Leaders. They are encouraged to make a
commitment to take the necessary action to implement their plan when they return to
their country.
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January 21, 2004
APPENDIX IV: PROGRAM AGENDA
ASSAL – TORONTO CENTRE BANKING SUPERVISION: March 14-20, 2004
SUNDAY
MAR 14
MONDAY
MAR 15
TUESDAY
MAR 16
Opening/Welcome
The Context for
Change
WEDNESDAY
MAR 17
THURSDAY
MAR 18
MAR 19
FRIDAY
“Ideas I will Use”
“Ideas I will Use”
“Ideas I will Use”
ACTION
PLANNING
ACTION
PLANNING
CASE I:
CASE II:
CASE III:
SPECIAL TOPIC
PRESENTATION
Sovereign Life
Mexico CNSF
Reorg
Maple Tree
The Fight Against
Money Laundering
Action Planning
Don McIsaac
Manuel Aquilera
Lawrie Savage
Manuel Vasquez
LUNCH
LUNCH
LUNCH
LUNCH
LUNCH
CASE I:
CASE II:
CASE III:
VIGNETTE II:
Sovereign Life
Mexico CNSF
Reorg
Maple Tree
Licensing of
Financial
Institutions
(continued)
(continued)
(continued)
Lawrie Savage
The Leadership
Challenge
Catherine ChandlerCrichlow
Action Plan
Preparation
SATURDAY
MAR 20
Departure of
Participants
Leo Querel
Action Plan
Presentations
The Associates
Program
Action Plan
Presentations
Certificate
Ceremony
DINNER
DINNER
DINNER
DINNER
DINNER
DINNER
Individual Work on
Action Plan
Individual Work on
Action Plan
LEADERSHIP
PRESENTATION
Individual Work on
Action Plan
Closing Dinner
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