22 June 2015

IAIS: Consultations launched on revision of insurance core principles and new glossary definitions

The International Association of Insurers Supervisors is proposing revisions to the ICPs as well as some key Glossary definitions. The IAIS is revising the Insurance Core Principles 4, 5, 7, 8, 23 and 25. The public consultation period is 17 June 2015 - 17 August 2015.

The IAIS is presenting for consultation proposed revisions to the following ICPs:

• ICP 4 Licensing
• ICP 5 Suitability of Persons
• ICP 7 Corporate Governance
• ICP 8 Risk Management and Internal Controls
• ICP 23 Group-wide Supervision
• ICP 25 Supervisory Cooperation and Coordination

The decision to include groups in the term "insurer" has formed the basis for the drafting of the ICP revisions. Another proposal, as seen in the Glossary, is that the term "legal entities" would encompass branches of such legal entities, so as to avoid confusion about the status of branches within the ICPs and avoid additional drafting in respect of branches.

Other definitions have been introduced reflecting recent developments related to governance and risk management, group supervision and application at the head of the group. Where appropriate, definitions have also been aligned with definitions of other Standard Setting Bodies for consistency.

ICPs 4, 5, 7 and 8 are being revised following the Self-Assessment and Peer Review (SAPR) in 2014 of these ICPs, which found that there were areas where clarifications to these ICPs would help jurisdictions improve observance. The IAIS is addressing the findings from the SAPR report in relevant standards and guidance. The revisions to these ICPs also take into consideration the revisions to ICP 23 which revealed a need to strengthen supervisory approaches to group-wide supervision and requirements on the Head of the Group in other ICPs as well. The amendments necessary with respect to group-wide supervision are forming part of the overall proposals for revision of these ICPs.

ICP 7 and 8 have also been amended to ensure alignment with corresponding principles, standards or guidance from the FSB and the Basel Committee on Banking Supervision, including the need to enhance the responsibilities of the insurers' Boards with respect to the external auditors following from BCBS guidelines on external audits of banks adopted in March 2014.

Shortly after its adoption in 2011, ICP 23 underwent a Self-Assessment and Peer Review (SAPR). In the SAPR it was noticed that ICP 23 did not offer sufficient clarity over the expectations of how group-wide supervision should be performed. More specifically, there were instances of duplication with other ICPs and a lack of clarity amongst supervisors made implementation difficult.

The revisions to ICP 23 also revealed a need to review various ICPs to strengthen supervisory approaches to group-wide supervision and requirements on the Head of the Group. ICP 25 has also been impacted as the need for greater clarity of the roles of home and host supervisors was identified.

The review impacts on several ICPs, including ICPs 4, 5, 7 and 8, which have been revised accordingly and are also part of this consultation. Any amendments related to group-wide supervision in other ICPs will be folded into the review of the respective ICPs following the SAPR of these ICPs.

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