Established in 1994, the IAIS represents insurance
regulators and supervisors of more than 200 jurisdictions in nearly 140
countries, constituting 97% of the world's insurance premiums. Its
objectives are to:
- Promote effective and globally consistent supervision of the insurance industry in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders; and to
- Contribute to global financial stability
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ICP 1 Objectives, Powers and Responsibilities of the Supervisor
The authority (or authorities) responsible for insurance
supervision and the objectives of insurance supervision are clearly
defined.
1.1 |
Primary legislation clearly defines the authority (or authorities) responsible for insurance supervision.
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1.1.1 |
The
authority (or authorities) responsible for insurance supervision should
be clearly identified in primary legislation. Where there are multiple
authorities responsible for insurance supervision (e.g. separate
authorities for prudential and market conduct supervision, for macro and
micro prudential supervision, or for licensing and ongoing
supervision), it is important that the institutional framework and the
responsibilities of the respective authorities are clearly set out in
legislation for clarity and to ensure all the objectives of insurance
supervision are met.
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1.2.1 |
Publicly
defined objectives foster transparency. With this basis, the public,
government, legislatures and other interested bodies can form
expectations about insurance supervision and assess how well the
authority is achieving its mandate and fulfilling its responsibilities.
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1.2.2 |
Being
entrenched in primary legislation ensures that the mandate and
functions of the supervisor cannot be changed on an ad-hoc basis. The
process of periodically updating the primary legislation can promote
transparency by way of public discussions on relevant issues; however,
if done too frequently, stakeholders may form the impression that the
policymaking process is unstable. Therefore, it would be prudent to
avoid being overly specific in the primary legislation, which could be
supplemented as needed with updated regulations, for example.
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1.2.3 |
Legislation
should be clearly specified and sufficiently extended so that the
objectives of legal entity and group-wide supervision are allowed for
and the supervisor has adequate powers to achieve these objectives.
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1.2.4 |
The
objectives of group-wide supervision could be achieved either by direct
means where the supervisor has explicit authority and powers over
entities within the group, including the head of the group, or via the
use of an indirect approach where the supervisor has adequate power and
authority over the regulated insurer to access information in respect of
the head of and other entities in the group and apply relevant
requirements.
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1.2.5 |
As
overall coordinator for the supervision of the group, the group-wide
supervisor should have sufficient legal power and authorities in place
in order to practice supervision on a group-wide basis whilst also
effecting coordination and collaboration with other relevant
supervisors.
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1.2.6 |
The
group-wide supervisor should have sufficient authority and power in
order to coordinate and disseminate the essential information needed for
reviewing and evaluating risks and assessing solvency on a group-wide
basis. A group-wide supervisor ultimately should be responsible for
ensuring effective and efficient group-wide supervision.
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1.2.7 |
At a
jurisdictional level, it is important that legislation supports the
supervisor of an insurer which is part of a group to appropriately
contribute to the supervision of that group on a group-wide basis.
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1.3 |
The principal objectives of
supervision promote the maintenance of a fair, safe and stable insurance
sector for the benefit and protection of policyholders.
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1.3.1 |
While
the precise objectives of supervision may vary by jurisdiction, it is
important that all insurance supervisors are charged with the objective
of protecting the interests of policyholders.
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1.3.2 |
Often
the supervisor’s mandate includes several objectives. As financial
markets evolve and depending on current financial conditions, the
emphasis a supervisor places on a particular objective may change and,
where requested, this should be explained.
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1.4 |
Where,
in the fulfilment of its objectives, the supervisor identifies
conflicts between legislation and supervisory objectives, the supervisor
initiates or proposes correction in legislation.
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1.4.1 |
As
markets evolve, the supervisor may identify changes in the environment
that affect the fairness, safety or stability of the insurance sector
that are not currently addressed by legislation. The supervisor should
initiate or propose changes to legislation to ensure supervisory
objectives can continue to be achieved.
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