1. Development of International Insurance Supervisory Standards Yoshihiro Kawai Secretary General International Association of Insurance Supervisors 19 November 2013 1

2. 2 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

3. 3 1. Background Globalised insurer operations IAIG’s (Internationally Active Insurance Groups) global market share is more than 50% AIG crisis Interconnected markets / products / institutions

4. 4 Home Host Structure of Internationally Active Insurance Groups 1. Background

5. 5 EuropeAmericas Other regionsAsia Interlinkage across borders 1. Background

6. Securities Shadow Banking BankingInsurance 6 Interlinkage across financial sector 1. Background

7. 7 New regulatory focus: global and panoramic view Macroprudential approach Group-wide supervision Common supervisory language Coordination across sectors

8. 8 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

9. 2. IAIS Three-layer Approach

10. 10 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

11. 3. ICPs Scope: Insurance legal entities and insurance groups (unless otherwise specified) Three levels: Principles, Standards, and Guidance Proportionality: Tailored approach taking into account nature, scale and complexity of insurers.

12. 3. ICP 23 on Group-wide Supervision 23.1 Identification of the scope of the group 23.3 The supervisor does not narrow the identified scope of the group due to lack of legal authority and/or supervisory power

13. 13 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

14. 4. ComFrame Objectives: Establish a comprehensive framework for group-wide supervision Foster global convergence of regulatory and supervisory requirements Scope: IAIGs and G-SIIs

15. Comments due by 16 December 2013 Comments requested on all aspects of ComFrame Including: -Capital adequacy assessment -Resolution 4. ComFrame: 2013 Consultation

16. 4. ComFrame: Field Testing Module 1 Module 1 field testing launched with a survey of all IAIS Members Responses due by 16 December Survey includes: - Scope of group wide supervision - Population of IAIGs - Powers over the holding company

17. 4. ComFrame: Scope of Group-wide Supervision and Power over Holding Companies

18. 18 Outline 1.Background 2.Three-layer Approach 3.Insurance Core Principles (ICPs) 4.ComFrame 5.Global Insurance Capital Standard 6.Conclusion

19. 5. Risk-based global insurance capital standard (ICS) What is ICS (Global Insurance Capital Standard) ? Why ICS now? Why capital? When it is to be developed?

20. 5. ICS: What is ICS (Global Insurance Capital Standard)? Not regional led approach Not banking led approach Unique IAIS initiative

21. 5. ICS: Why ICS now? IAIS ExCo intensive discussions No quantitative IAIS benchmarks No common supervisory language Solvency II’s development

22. 5. ICS: Why capital? Capital is key supervisory tool Capital has significant positive impact on other supervisory standards Capital is a trigger to develop a common supervisory language

23. 5. ICS: When is it to be developed? DateActivity Early 2014Testing of BCRs (Backstop Capital Requirements) Testing ICS (in particular valuation) November 2014BCRs finalised and ready for implementation by G-SIIs 2015 - 2016Testing of ICS End 2016Development of ICS completed by IAIS 2017 - 2018Testing and refinement of ICS End 2018Adoption of ICS 2019Implementation of ICS begins

24. 6. Conclusion: a panoramic supervisory view Macroprudential approach - G-SII discussion Group-wide supervision - ComFrame and revision to ICP23 - Enhanced supervision for G-SIIs Common supervisory language - ComFrame - ICS Coordination across sectors - NTNI (non traditional and non insurance) focused G-SII policy framework

25. Thank you very much www.iaisweb.org yoshihiro.kawai@bis.org 25