Current Challenges in Financial Regulation and Supervision – an IAIS Perspective
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Current Challenges in Financial Current Challenges in Financial Regulation and Supervision Regulation and Supervision
– an IAIS Perspective– an IAIS Perspective
Peter BraumüllerChairman of the IAIS Executive Committee
2010 Annual Conference of Macedonian Stock Exchange30 April 2010
30 Apr 2010 1
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230 Apr 2010
ContentContent
• The International Association of Insurance Supervisors (IAIS) - structure and objectives
• Current global challenges
• IAIS Responses
• Outlook
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330 Apr 2010
The IAISThe IAIS
• Founded in 1994• Represents insurance
regulators and supervisors• World wide membership• 202 Members (including 57 US Members) • 135 Observers• Secretariat based in Basel, Switzerland
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Key IAIS objectivesKey IAIS objectives
Improved supervision through standard implementation
Well-regulated and well-supervised insurance markets
Global financial stability
Fair, safe and stable insurance markets
Policyholder protection
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Current Global ChallengesCurrent Global Challenges
• Systemic Risk and Insurance• Macroprudential Supervision• Group-wide Supervision• Supervisory Cooperation• Standard Implementation• New Global Supervisory Architecture
530 Apr 2010
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Systemic Risk and InsuranceSystemic Risk and Insurance
Challenges:• Defining systemic risk in the context of insurance
• Criteria (Size, Substitutability, Interconnectedness)
IAIS Response:• IAIS Financial Stability Committee finalising a note for submission to the
FSB.
• Considerations
– Time horizon
– Insurance business model
– Instigation, transmission or amplification of risks
630 Apr 2010
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Macroprudential SurveillenceMacroprudential Surveillence
Challenge:Improving macroprudential supervision
IAIS Response:• Exploring the setting-up of a macroprudential surveillance framework• Development of macroprudential tools• New Insurance Core Principle ICP 24
730 Apr 2010
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Group-wide supervisionGroup-wide supervision
Challenge:Strengthening group-wide supervision and minimising cross-sectoral
regulatory arbitrage
IAIS Response:• Developing a Common Framework for the Supervision of Internationally
Active Insurance Groups (ComFrame)• On-going standard setting work on insurance groups• Guidance Paper on non-regulated entities
830 Apr 2010
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Supervisory CooperationSupervisory Cooperation
Challenge:Strengthening international supervisory cooperation
IAIS Response:• IAIS Multilateral Memorandum of Understanding (MMoU)• Review relevant ICPs and standards• Guidance on supervisory colleges and group-wide supervisor
930 Apr 2010
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Standard ImplementationStandard Implementation
Challenge:Enhancing standard implementation activities and minimising cross-
border regulatory arbitrage
IAIS Response:• Develop IAIS policy on implementation and assessment• Exploring a peer review framework to foster adherence to IAIS Principles
and Standards
1030 Apr 2010
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New Global Supervisory ArchitectureNew Global Supervisory Architecture
Challenge:G20 and Financial Stability Board (FSB) issue recommendations and
monitor implementation
IAIS Response:• IAIS representation on FSB including relevant Working Groups• Ensure appropriate treatment of insurance in within FSB activities
1130 Apr 2010
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1230 Apr 2010
OutlookOutlook
• All financial sector supervisors can learn from the recent financial crisis - future crises might be different
• Identify the role of insurance in the context of global financial stability
• Strengthen implementation and cooperation
• Move towards globally consistent regulation and supervision of the insurance industry
• Minimise cross-border and cross-sector regulatory arbitrage