Domestic Regulation John Cooke IAIS Observer Panel Presentation John Cooke Head of international Relations Association of British Insurers

Domestic Regulation Key Features GATS Approach Transparency Necessity Consistency with GATS Conclusion

Domestic Regulation: Key Features necessary, reasonable, proportionate, transparent conducive to market-entry, facilitates innovation technologically neutral funded by administrative fees reflecting costs only paves way for harmonised international standards

General Agreement on Trade in Services Article III publication of measures and notification to WTO Article VI applies where specific commitments given requires publication, consultation, fair application processes, appeals, arbitration – domestic transparency

GATS: Prudential Carve-Out “Notwithstanding any other provision of [GATS], a member shall not be prevented from taking measures for prudential reasons, including for the protection of investors [and] policyholders… or to ensure the integrity and stability of the financial system.” But carve-out cannot be used to avoid GATS commitments

Two Questions of Balance 1. Balance between - strong domestic regulation; and - avoidance of barriers to trade 2. Balance between - “horizontal” approach (all sectors); and - “vertical” approach (sector-specific) ESF believes in flexible balance in both cases

Transparency Transparency Annex Issues - Prior consultation - Privacy and Confidentiality - Emerging Markets - WTO notifications - special sectoral disciplines

Necessity Four Key Elements - legitimacy of regulatory objectives - necessity of regulatory measure - proportionality test - periodic review

Consistency with GATS Requirements Sectoral Regulation to cater for commitments to market access and national treatment “best practices” (additional commitments under GATS Article XVIII) Example: The “Insurance Model Schedule”

Conclusion Need for broad principles and regulatory approaches in GATS frameworks Major insurance industry interest in GATS rules-based system Major role for IAIS and other international standard-setting bodies