Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on its draft definition and high-level principles for comparable outcomes to the Insurance Capital Standard (ICS).
Insurance Europe reiterated its support for the ICS but stressed that it should only be considered for implementation if all major jurisdictions commit to the standard. This is the only way to guarantee a global regulatory level playing field.
While the IAIS’ proposal for the definition of comparable outcomes and high-level principles is a good starting point for assessing comparability between the ICS and the aggregation method (AM), there are key areas where the definition and principles must be adjusted.
Specifically, for the AM and ICS to be comparable over time, it is key that the AM ensures the same level of policyholder protection as the ICS. It is therefore important that the AM provides a similar ladder of supervisory intervention to the ICS, based on capital adequacy grounds with the same target criteria. This should be tested through a sufficiently robust and continuous quantitative assessment.
In addition, the AM should provide a representative and relevant amount of data that enables quantitative comparison with the ICS, covering a diversity of business models and business lines, geographical footprints, various financial and market conditions, including both normal and stress market situations.