1. Assessing compliance with ICPs ICP 17
Rogier Derksen
24 May 2016

2. Overview
Background on the Exercise
ICP 17
Developing Action Plans

3. How to Conduct and Assessment

4. Assessing against the objective
The Three “P’s”
Essential Components
Questions
Framework
Do I have the power to achieve the objective of the standard? Is the power have the force of legislation? Is it fully and clearly elaborated?
Policies and Procedures
Do I have the policies and procedures that put the power in practice in support of the objective?
Supervisory Practice
Do I undertake the practices to achieve the objective?

5. Assessment Categories
IAIS Assessment Categories
How is the objective assessed?
Do I have the legal framework?
Do I have the policies and procedures to put the power into practice?
Assessment Category
Elaboration
Observed
All essential criteria observed
Largely observed
Only minor shortcomings exist
Partly observed
Despite progress, shortcomings sufficient to raise doubts
Not observed
No substantive progress
Not applicable
Not applicable due to structural/ legal/ institutional features or responsibility with other authorities

6. ICP 17

7. ICP 17: Capital Adequacy ICP 17 Solvency
The supervisor establishes capital adequacy requirements for solvency purposes so that insurers can absorb significant unforeseen losses and to provide for degrees of supervisory intervention.
Applies to insurance legal entities and any risks posed by non-insurance entities on insurance groups
Total balance sheet approach
Establishment of regulatory capital requirements control levels and triggers for intervention (SCR/PCR, MCR)
Transparent determination of regulatory capital
Roles of technical provisions and regulatory capital clarified
Criteria for assessment of availability and quality of capital
Standards and guidance on use of internal models
Similarly for ICP 17 on capital adequacy
The scope covers all risk within an insurance group
The approach to capital adequacy is based on a total balance sheet starting point – often something that is discussed at length, but the principle at least is straightforward. All material assets and liabilities need to be measured on a consistent basis.
The “ladder of intervention” is standardised to the extent that different supervisors can obtain a common view on levels of capital and triggers for intervention
Disclosure is a key area and transparency in the determination of regulatory capital is also established
The different roles of risk margins and technical provisions, when compared with regulatory capital are made more clear
Criteria are established for the common assessment of availability and quality of capital
And – standards and guidance are introduced on the use of internal models

8. Key questions for the exercise

9. Key Questions? What is ISD’s Observance level?
How can ISD improve its observance?
Long term
Short term
Any other observations?