IAIS published a statement from its Secretary General Jonathan Dixon on the Insurance Capital Standard (ICS) monitoring period. The statement informs about the IAIS expectations regarding participation in the monitoring period, the ultimate goal of a single global capital standard for Internationally Active Insurance Groups (IAIGs), and the refinement process of the ICS during the monitoring period. The draft definition of comparable outcomes and high-level principles will be subject to a public consultation later this year, as will the draft comparability criteria in 2021.
IAIS is developing the ICS as the global standard to be used as a prescribed capital requirement for Internationally Active Insurance Groups (IAIGs), based on a common set of principles. US members have indicated that their supervisory framework does not support a group-wide consolidated approach to a prescribed capital requirement. Therefore, the US and other interested jurisdictions are developing an Aggregation Method that follows a different approach than the ICS; they aim to use this approach for their implementation of the ICS on an outcome-equivalent basis. The Aggregation Method is not part of the ICS Version 2.0, nor is it being developed by IAIS as an alternate global standard.
The assessment of whether the Aggregation Method provides comparable outcomes to the ICS will be a technical assessment undertaken by IAIS. As a first step, IAIS has published a draft definition of comparable outcomes and considerations that will guide the development of high-level principles and criteria for the comparability assessment. IAIS has made it clear that this will be a robust and credible technical assessment that does not provide the Aggregation Method a free pass, while providing a viable path for the Aggregation Method to be deemed an outcome equivalent approach. This draft definition of comparable outcomes and high-level principles will be subject to a public consultation later this year, as will the draft comparability criteria in 2021.
The aim is to monitor the performance of the ICS over a period of time, rather than the capital adequacy of IAIGs. Active participation of IAIGs in the monitoring period is important for providing effective feedback on the ICS. IAIS does not have the legal power to directly mandate IAIGs to report the ICS results during the monitoring period. However, IAIS member supervisors collectively agreed to make participation as large as possible across different jurisdictions and business models, to ensure that the ICS captures risk appropriately. In addition to the feedback from supervisors, the IAIS will consider feedback from stakeholder engagement, a public consultation, and the results of an economic impact assessment, all of which could result in changes to the ICS Version 2.0. In the coming months, IAIS will collectively review the level of IAIG participation and discuss appropriate actions as necessary.
Keywords: International, Americas, US, Insurance, ICS, ICS Version 2, IAIG, Aggregation Method, Capital Adequacy, IAIS
Previous ArticleBoE Updates Version 1.1.0 of Taxonomy for Form AS and Form FV
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.
BIS announced that it will establish new Innovation Hub centers across Europe and in North America in cooperation with member central banks.
FED updated the reporting form for FR 2052a, which is used to monitor the overall liquidity profile of certain supervised institutions.
PRA published a statement that sets out its views on certain amendments made to Capital Requirements Regulations (CRR and CRR2) via EU Regulation 2020/873 (CRR "Quick Fix"), including some guidance for firms.
The Climate Financial Risk Forum (CFRF), which is a joint climate risk forum of FCA and PRA, published a guide written by the industry for the industry to help firms approach and address climate-related financial risks.
IAIS published an application paper on liquidity risk management for insurers.
EBA published its response to the EC consultation on a new Digital Finance Strategy for Europe.
EIOPA responded to the EC consultation on a new digital finance strategy for Europe.
ESMA published its response to the EC consultation on the new digital finance strategy for EU.
FSB published, for consultation, a report on evaluation of the too-big-to-fail (TBTF) reforms for systemically important banks.