1. IAIS Major Projects Update Implementation Committee
Ekrem Sarper
Acting Chair of the Implementation Committee
Annual Conference, 2-3 November 2017, Kuala Lumpur

2. Overview of work of the IC
Strategic review of the Coordinated Implementation Framework launched in early 2017
Small task force of ExCo & IC members
Focus on four pillars of implementation
Assessment and Implementation Monitoring
Capacity Building
Supervisory Cooperation
Supervisory Practices
In 2017, IC reviewed the CIF in order to examine whether external developments necessitated revision of the CIF, and determine what steps the IAIS can take to enhance engagement with its Emerging Market and Developing Economy (EMDE) Members. The revised CIF is based on the 2013 CIF by focussing on activities important for implementation and the IAIS role, and also a more focus on the needs from Emerging Markets Members.

3. Assessment and Implementation Monitoring
Assessments are at the core of the IAIS’ implementation programme.
Finalised two Self-assessment and Peer Review (SAPR) on
Market Conduct (ICPs 18 and 19); and
Reinsurance and Macroprudential Surveillance (ICPs 13 and 24)
Launched a review on implementation of policy measures for G-SIIs
Strengthening the IAIS Assessment Programme going forward:
enhanced Peer Review Process, Member Review Process, and self-assessment tools
KEY ACHIEVEMENTS:
Finished the first cycle of SAPR (2011 – 2017)
Nearly 130 jurisdictions have participated
Over 190 Standards in ICPs have been assessed
Average of 70 jurisdictions participate in each assessment, representing all IAIS regions and economic / insurance market development.
Assessment and Implementation Monitoring
Regarding the Assessment and Implementation Monitoring, the IAIS has updated the IAIS Assessment Handbook to better reflect the current practice on assessing Insurance Core Principles and review on supervisory materials.
In 2017, the IAIS has completed the Self-assessment and peer review on Market Conduct (ICPs 18 and 19) and Reinsurance and Macroprudential Surveillance (ICPs 13 and 24). Aggregate reports are available on the IAIS public website. The IAIS also launched a review on implementation of the policy measures for globally systemically important insurers.
In addition to this, the IAIS piolet a project to strengthen the IAIS Assessment Programme in This will involve three different assessment process:
Strengthening the Peer Review Process (PRP) through building on the IAIS’ successful self-assessment and peer review process
Enhancing access to self-assessment tools with establishment of a Self- Assessment Portal (SAP) so Members can undertake self-assessments on demand
Addressing the emerging assessment gap with a Member Review Process (MRP) which provides a process for comprehensive review of IAIS Members implementation of supervisory material
The three processes would be complimentary to each other, with each relying on the same foundational tools, the questionnaires designed as part of the SAPR and, in the future, the Peer Review Process.
KEY ACHIEVEMENTS:
The IAIS has completed the first cycle of SAPRs since 2011 to Over the time,
Nearly 130 jurisdictions have participated;
Over 190 Standards in ICPs have been assessed;
Average of 70 jurisdictions participate in each assessment, representing all IAIS regions and economic / insurance market development.

4. Assessment and Implementation Monitoring
As the IAIS moves towards a new assessment programme in 2018, I wanted to take the opportunity to pause for a minute to reflect on what we saw.
On the table, each row is a different region. Starting from Americas and moving down towards Western Europe.
The dark green colour reflects a high level of observance. Largely observed is light green and yellow is partly observed.
Based on this graph, I want to make two points: 1) we can be happy with the large amount of green, but if we scratch the surface we can see that globally there remain shortcomings and this reflects the on-going challenges of transitioning to a risk based supervisory model and 2) the inputs from the assessment work have been very important for the work
Color code: Mostly complied; only minor shortcomings exist; requires improvement

5. Capacity Building
FIRST ONE Programme (joint with FSI): 200+ participants
Capacity Building Survey (joint with A2ii): Identified challenges and needs for developing insurance supervisors
Core Curriculum Refresh Project: Supported by nearly 80 volunteers
Regional Seminars: 9 supported
Supervisory Capacity Building in Actuarial Services Programme (joint with ADB, AFIR, CAA, CIRC, IAA): Held in Asia, the largest training programme of three year’s ADB Technical Assistance Programme
Capacity Building
The IAIS is neither a technical assistance provider nor a training institute. However, the IAIS works closely with partners to develop and deliver training to insurance supervisors. The IAIS facilitates capacity building work by leveraging it unique global position as the global standard setter for insurance and working with Implementation Partners (including A2ii) to deliver outcomes to members.
Together with FSI, the IAIS run the 4th FIRST ONE Programme in More than 200 participants joined from over 50 member jurisdictions.
The IAIS conducted a survey on capacity building and development needs and a survey report was published in The survey shows that half of the respondents do not have sufficient financial resources available for the development of insurance supervisors, in particular in Sub-Sahara Africa, the MENA, and the Offshore and Caribbean Islands regions. Besides, respondents indicate that macroprudential supervision, market conduct supervision, and microinsurance are the top three priorities that need to further develop for capacity building.
The Core Curriculum Refresh project commenced in 2016 and relies on volunteer support, primarily from IAIS Members. It is therefore a member driven project and will benefit all IAIS members, Emerging Markets and Developing Economies in particular. Phase 2 also addresses some accessibility concern as a key success criteria is the use of the material. These include splitting modules to have larger number of shorter modules, improving readability (as many, if not a majority of readers are not native English speakers), and an increased focus on supervisory practices.
A 1 week long supervisory capacity training program, focusing on actuarial services in supervisors, was held in China for the week of 17 July this year. This was the largest training program held under a now competed 3 year Technical Assistance program with the Asian Development Bank. It demonstrated the that multi-sponsor programs can be successfully delivered –with the IAIS providing supervisory expertise, the IAA actuarial expertise, the ADB funding, and the CIRC hosting the event. A High Level Roundtable for senior supervisors in the region, hosted by the ADB in Manila, then followed at the beginning of September. This reaffirmed the need for capacity building in supervisors, particularly in actuarially related areas, and encouraged developing long-term initiatives, regionally and globally.

6. Supervisory Practices
Development of Application and Issues Papers
Application Paper on Mutuals, Cooperatives and Community-based Organisations
Application Paper on Product Oversight Inclusive Insurance
Application Paper on Use of Digital Technology in Inclusive Insurance
Issues Paper on Index-based Insurance
Proportionality in Practice Case Studies
A2ii/IAIS Consultation Calls: Participants from 60+ jurisdictions joined
A2ii/IAIS/MIN Consultative Forums: 90+ participants joined
Supervisory Cooperation
The IAIS promotes supervisory cooperation and information exchange amongst members through the Multilateral Memorandum of Understanding (MMoU). The Signatories Working Group of the MMoU and the Secretariat manage the application and approval process for signatories.
To be a signatory of the MMoU one needs to be a Member of the IAIS and undergo a rigorous review process by a validation team made of information exchange experts. If approved by the validation team, a jurisdiction can officially become a Member. This rigorous process assures other signatories that information can be exchanged and it will be protected in line with the MMoU.
Supervisory Practices
Completed:
Application Paper on Mutuals, Cooperatives and Community-based Organisations (MCCOs)
Work in Progress
Application Paper on Product Oversight Inclusive Insurance
Application Paper on Use of Digital Technology in Inclusive Insurance
Issues Paper on Index-based Insurance

7. Supervisory Cooperation
3 new authorities to the MMoU
64 Signatories
70% of world premium
12 more jurisdictions in the validation process

8. Application Paper on MCCOs
Application Guidance for proportionate application of ICPs to Mutuals, Cooperatives and Community-based Organisations (MCCOs)
Distinguishing features of MCCOs merit special treatment re a proportionate application of ICPs
(Potential) role of MCCOs in inclusive insurance markets
Focus on specific features of MCCOs relevant to the application of specific ICPs
Guidance applies to MCCOs as insurer and - if indicated – as intermediary
A diverse range of institutions are commonly described as MCCOs, including mutuals, mutual benefit organisations, cooperatives, friendly societies, burial societies, fraternal societies, community-based organisations, risk pooling organisations and self-insuring schemes.
MCCOs have several specific features that distinguish from insurers that are share companies, such as the fact that MCCOs are member-owned and involve their members/policyholders in the governance of the organisation. Their ability to operate independently as stand-alone entities in remote and rural areas without long distribution lines makes them a potentially important business model for improving access to insurance.
The purpose of this paper is to provide application guidance on the way the ICPs could be applied in a proportionate manner which should contribute to removing unnecessary barriers by disproportionate regulation and supervision, while at the same time ensuring appropriate policyholder protection. The primary focus of this paper is for insurance supervisors who are seeking to enhance financial inclusion in developing markets.
It is not suggested that supervisors should give preferential treatment to MCCOs. It in fact suggests that when seeking to enhance access to insurance all avenues should be explored, including using MCCOs.

9. Contents of the MCCO Paper
Section 2: Definitions, characteristics of MCCOs, partnerships / groups and size of the MCCO sector
Section 3: Application Guidance by themes:
Formalisation and Licensing
Corporate Governance
Capital Requirements and Resources
Portfolio-transfers, Mergers, Demutualisation and Winding-up
Supervision and Supervisory Review
Focus on specific features of MCCOs relevant to the application of specific ICPs
Applying to MCCOs as insurer and - if indicated – as intermediary
Section 2 provides a description of the main features and background of the MCCO sector, which should assist in an adequate understanding of the context in which the ICPs could be applied in a proportionate manner.
For this purpose this section provides a definition of MCCOs and describes the key defining characteristics and range of organisational forms.
Also, Federations, Associations, Groups and Apex organisations that are sometimes used are discussed as these might affect the application of some ICPs and call for specific guidance.
Finally in this section details on the quantitative size of the MCCO sector are provided.
Section 3 of the paper provides considerations and guidance for implementation of various ICPs where the specific characteristics of the MCCO sector gives rise to a specific approach from a perspective of proportionality. The ICPs describe the proportionality principle by indicating that: “supervisory measures should be appropriate to attain the supervisory objectives of a jurisdiction and should not go beyond what is necessary to achieve those objectives.” The proportionality principle in the ICPs gives room to consider specific characteristics of the MCCO sector.
In respect of MCCOs, types of member ownership roles, democracy, and profit / surplus retention, may give reason to tailor regulatory arrangements and supervisory obligations. Some of the business practices, processes and other characteristics in respect of MCCOs may call for specific treatment to achieve the desired outcome of a Principle or Standard.
This section 3 intends to provide guidance for this tailored arrangements in regulation and supervision.