The International Association of Insurance Supervisors (IAIS) has announced what it calls “a unified path to convergence of group capital standards, in furtherance of its ultimate goal of a single insurance capital standard (ICS) that achieves comparable outcomes across jurisdictions”.
The pivotal agreement is a response to a call from members for more clarity on what the implementation of ICS Version 2.0 will mean in practice.
Vicky Saporta, chair of the IAIS executive committee, said: “By reaching this agreement, the IAIS will achieve its aim of creating a common language for supervisory discussions of group solvency. We have reflected the priorities of our members and made significant progress towards our ultimate goal.”
The implementation of ICS Version 2.0 will be conducted in two phases – a five-year monitoring phase followed by an implementation phase. It will have two equally important components: mandatory confidential reporting by all internationally active insurance groups of a reference ICS, and additional reporting at the option of the group-wide supervisor.
Following the announcement by members from the US of development of an aggregation-based group capital calculation, the IAIS has further agreed to collect data to allow it to assess by the end of the monitoring period whether or not the aggregation method provides comparable outcomes to the ICS.
Ted Nickel, president of the National Association of Insurance Commissioners, said: “This is a remarkable accomplishment, achieved through a lot of give and take. It has been said that it is always darkest before the dawn and with this path forward on Version 2.0, we have our dawn. We look forward to continuing to be part of the important work ahead.”
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