IAIS update: 2017 Global Seminar
Insurance supervisors address risk, regulation, and technology
The 10th annual Global Seminar of the International Association of Insurance Supervisors (IAIS) featured discussion, debates, and important steps forward on how best to manage risk, guide technology innovation, institute and oversee regulation, protect consumers, and more. Deloitte’s comprehensive IAIS update provides you with all the highlights and insights.
- IAIS: A standard bearer through change and uncertainty
- Controlling systemic risk a focal point
- Striking a regulatory balance
- Assessing the impact of industry digitalization
- Read more, learn more
IAIS: A standard bearer through change and uncertainty
When more than 120 insurance supervisors and regulators from around the world gather in one place to set standards for the global insurance industry, it's bound to be a filled with a range of perspectives and insights. The International Association of Insurance Supervisors (IAIS) gathered in Old Windsor, England, in late June for its 10th annual Global Seminar and it was an event punctuated by both spirited debate and measurable progress.
Amidst the tranquil setting of the Thames River, the volatility and uncertainty of the global political climate permeated much of the discussion. The term "guardrails" was frequently used as a means for describing the primary focus and ultimate goal of the IAIS: to help prevent the economy—and, more specifically, the insurance sector—from falling off the cliff of systemic risk.
The global seminar marked the first IAIS event held since the inauguration of President Trump, whose administration is commonly believed to be far more sympathetic to US state regulators and others opposed to the imposition of international standards. The timing provided fertile ground for ongoing disagreements between some American and international stakeholders—both regulators and the regulated—as they debated the structure, if not the very need for International Capital Standards (ICS).
In her welcome speech, Chair of the IAIS Executive Committee and representative of the seminar host, Bank of England, Victoria Saporta acknowledged the political concerns, but reiterated her belief (perhaps in response to those that might question the regulatory authority of the organization) that the IAIS is a standard setter.
Controlling systemic risk a focal point
The IAIS is spearheading key initiatives devoted to the mitigation and reduction of systemic risk: the development of a Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) and of International Capital Standards for internationally active and systemically important insurers.
Work on both fronts continues relatively on target. IAIS announced plans for a public consultation on ComFrame—including ICS version 2.0—in mid-2018 and the approval of extended field testing for ICS version 1.0—with publication slated for mid-July 2017.
Also, at the global seminar, IAIS held its first stakeholder session on the development of an activities-based approach to systemic risk assessment, which is projected to continue through 2019. Work on the development of a conceptual framework for an activities-based approach and on cross-sectoral consistency in systemic risk assessment is expected to be followed by a consultation on the initial findings in November of this year. IAIS acknowledged that there is still much work to be done on all three initiatives and it is unlikely that the dynamics of the global political environment will make progress easier.
Striking a regulatory balance
The issue of industry regulation was pervasive at this year's seminar. Some of the more impassioned discussion took place around the use of regulation to set conduct standards and protect consumers—particularly in insurance distribution.
Like its counterpart, the National Association of Insurance Commissioners (NAIC), the IAIS has made consumer protection central to its mission and stated its willingness to devote resources to the creation of high-level conduct of business principles. Examples such as a new insurance distribution directive distributed by the Financial Conduct Authority of the United Kingdom were discussed as effective approaches to promoting good conduct and improving consumer confidence.
Assessing the impact of industry digitalization
IAIS continues to acknowledge the growing importance of what it sees as the digitalization of the insurance sector. The organization recently released a report entitled “Fintech developments in the insurance industry,” and noted that the “digitalization of the insurance sector is a policy area warranting further supervisory attention.” The global seminar featured a panel on the effects of innovations on insurance consumers, and included a range of perspectives on the potential risks and benefits to the industry and its consumers.
Also at the seminar, IAIS announced that is has dedicated resources to examining the uses and potential impacts of fintech and regtech. And, like NAIC, has established a work stream devoted to both innovations. The IAIS work stream will explore how insurers and associated entities are using fintech, and how regulators are deploying regtech tools to increase the scope, speed, and validity of their activities.
Read more, learn more
These highlights are just a partial recap of the issues that were discussed and advanced to further stages of exploration and action. Download the complete 2017 update for a full briefing.
IAIS updates collection
Read overviews of discussions held during the annual IAIS seminars over the past several years.Read more