Ensuring that global rules deliver value to policyholders if implemented in Europe
The International Association of Insurance Supervisors (IAIS) has for many years been developing a set of Insurance Core Principles (ICPs). The ICPs seek to encourage consistently high supervisory standards in IAIS member jurisdictions. ICPs do not have any legal basis in the EU but, once agreed internationally, European policymakers will consider if, and how, they should be incorporated into European regulation.
There have been two major projects in recent years. One is the Holistic Framework, adopted in November 2019. Its objective is to provide an international framework for insurance supervisors to support global financial stability through the assessment and mitigation of systemic risk in the global insurance sector. The Holistic Framework includes recovery and resolution and macro-prudential tools, both of which are areas included in the current review of Solvency II. Therefore, the Commission may make proposals as part of the review to implement some or all of the Holistic Framework into European legislation.
The second project is ComFrame, which aims to establish supervisory standards and guidance for the effective group-wide supervision of internationally active insurance groups (IAIGs). One key objective of ComFrame is to support the coordination of supervisory activities between the group-wide supervisor and other supervisors. The other key — and more ambitious — objective is to develop a global insurance capital standard (ICS) to provide a globally comparable, risk-based measure of the capital adequacy of IAIGs. The final ICS has not been agreed. A version 2.0 is currently under a five-year monitoring phase in some jurisdictions to assess how well it works.