1. IAIS Regime for Insurer Solvency Assessment - ASSAL Conference in Rio de Janeiro -
11May 2007
Yoshi Kawai – Secretary General
International Association of Insurance Supervisors (IAIS)
Website:
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

2. IAIS Regime for Insurer Solvency Assessment
Overview
Introduction
Common Structure for Solvency Assessment
Current Key activities: risk management and internal models
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

3. IAIS Regime for Insurer Solvency Assessment
Introduction
Project for more consistent, reliable and transparent approach to assessment of insurer solvency from 2005
Ultimate objectives:
(1)formulate a coherent risk-based methodology for solvency assessment
(2) Address qualitative components of solvency regime: corporate governance and market conduct
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

4. Framework for Insurance Supervision
the insurance sector and insurance supervision
basic conditions for the
effective functioning of
financial
governance
market conduct
supervisory assessment and intervention
the insurance supervisory authority
preconditions
regulatory
requirements
supervisory
action
LEVEL 1
LEVEL 2
LEVEL 3
May 2007
Yoshi Kawai

5. Common Structure for Solvency Assessment
Risk based solvency regime
- solvency regime should address all relevant risks
Total balance sheet approach
- assessing overall financial position of insurer on consistent measurement of asset and liabilities
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

6. Common Structure for Solvency Assessment (continued)
Market consistent valuation of insurance obligations (technical provisions)
- insurance obligations should be valued using cash flow models that reflect settlement of insurance obligations and accord with principles that market would expect to be used
Role of public financial reporting
- methodologies used for regulatory reporting and those for public financial reporting should be consistent
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

7. Common Structure for Solvency Assessment (continued)
Sound qualitative requirements
- insurers should meet sound governance and market conduct requirements
Public disclosure and transparency
- insurers should disclose information on assessment of solvency and financial strength
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai

8. Current key activities
Draft standard on risk management
Draft guidance on use of internal models
IAIS Regime for Insurer Solvency Assessment
May 2007
Yoshi Kawai