IAIS Issues Resolution of Comments on Paper on Corporate Governance
IAIS published its resolution of comments on the draft application paper on proactive supervision of corporate governance in insurance sector. IAIS had issued the draft application paper on November 08, 2018 and the consultation period ended on December 17, 2018. The draft paper on proactive supervision of corporate governance sets out good practices related to the organization and functioning of the supervisor. The aim is to raise awareness of, and to address, the organizational, cultural, and procedural challenges faced by supervisors in detecting problems in corporate governance and taking appropriate steps at an early stage.
The application paper discusses how the supervisor's own organization, culture, and processes should support proactive supervision. This encompasses the supervisor as well as its management team and staff. The paper provides a non-exhaustive list of early warning indicators—yellow and red flags—that may signal the need for investigation and, potentially, further action. Finally, the paper explains how effective communication by the supervisor with both insurers and the wider public can promote proactive supervision.
The application paper recognizes that there is no one-size-fits-all approach to proactive supervision. There are different steps that supervisors may decide to take, both organizational and procedural, direct and indirect, separately or together, to foster proactiveness. Whichever steps are taken, proactive supervision should be conducted proportionately to the issues identified, using an approach customized to the circumstances, including relevant supervisory objectives, laws, and regulations. Whether the supervisor has, or should have, certain legal powers to foster proactive supervision is outside the scope of the paper. Also external developments, which are outside the control and influence of the supervisor, fall outside the scope of the paper.
Keywords: International, Insurance, Corporate Governance, Operational Risk, Responses to Consultation, IAIS
