on Insurance Regulation and Supervision in Latin America IV Conference on Insurance Regulation and Supervision in Latin America Comparative Study on Insurance Regulation and Supervision in Latin America 9 May 2003 Punta Cana, Dominican Republic Yasumasa Tahara Directorate for Financial, Fiscal and Enterprise Affairs, OECD

What is this comparative study? Oaxaca Conference in 2000 16 Particularities What we are doing now? Update/Verification and New Issues Some Findings Asking for Your Co-operation

I. What is Comparative Study? First OECD/IAIS/ASSAL Conference on Insurance Regulation and Supervision in Latin America, 6-8 September 2000, Oaxaca, Mexico Survey covered 18 Latin-American Countries participated in the Oaxaca Conference 16 Particularities identified

II. 16 Particularities Supervisory Authority Specialising in Insurance Supervision or Financial Supervision including Insurance Admissibility of Composite Insurers Non-necessity of Business Plan for Licensing Restrictions on Market Access High Periodicity of Reporting European Type of Solvency Requirements

II. 16 Particularities (Continued) Non-adoption of Prudent-man Rules Restrictions on Portfolio Investment Abroad High Proportional Weight of Other Investments Maximum Retention Limit Registration System for Foreign Reinsurance Companies Internal Auditor

II. 16 Particularities (Continued) Non-existence of Policyholders’ Protection Funds Relatively High Number of Insurance Companies in Financial Difficulties Non-existence of Compulsory Motor Insurance Non-existence of Self-regulatory Functions of Insurance Industry Associations

III. Revising Comparative Study From Last Year Updates and Verifications Business Plan / Accounting Principles New Issues to be handled Consolidated Supervision / Corporate Governance / Systemic Risks

IV. Some Findings 1. Supervisory Structure (1st Particularity) Ministry’s Roles in Supervision No Role Reported in 2000. Several Countries Have Reported Their Supervisory Roles. Co-ordination among Supervisory Authorities Consolidated Supervision Required in 4 Countries. For Co-ordination, Committee Structure Adopted in 6 Countries.

VI. Some Findings 2. Specialisation (2nd Particularity) Composite Insurance Companies New establishment prohibited in 2 more countries. Cross-Distribution of Banking and Insurance Products Most countries prohibit; insurance companies to produce or distribute banking products. banks to produce insurance products. Many countries allow banks to distribute insurance products.

VI. Some Findings 3. Corporate Governance and Internal Control Many countries report there is no explicit legal provisions regarding corporate governance. Some countries (Mexico, Peru and Venezuela) have regulations on the functions and responsibilities of governing body. Structure and Duty of the Board of Directors / Compliance Officer About a half of the countries report their regulations on internal control, another half report no regulation exists. Implementation of Internal Control System / Internal Audit Unit / Assessment of Internal Control

VI. Some Findings 4. Business Plan (3rd Particularity) Only 6 Countries Reported Positively in 2000 Study. Definition Description of the kinds of risks the company proposes to cover Reinsurance plan Estimated setting-up costs and financial means Feasibility Study 11 Countries Have Already Responded Positively.

VI. Some Findings 5. Accounting Principles 10 countries with their own GAAP 2 countries report their GAAP generally follow the IAS 9 countries with the IAS Honduras from 1997 El Salvador from 2000 Guatemala from 2002 14 countries with statutory accounting principles

V. Schedule and Requests Please register contact person to yasumasa.tahara@oecd.org or fax: +33-1-4524-1833 by the end of next week (May 16th). Tables (Should be Prioritised): Please check the figures and description in the table and send it to us by the end of May. The earlier, the better. Draft text: Please check the draft text and give us comments by the end of May. As for the countries we need to ask additional information, please send us the answers as soon as possible.

Thank you for your co-operation