The Global Federation of Insurance Associations (GFIA) has offered its insights on the International Association of Insurance Supervisors’ (IAIS) application paper on the proactive supervision of corporate governance… and let’s just say the comments it submitted painted a not-so-rosy picture.
The draft application paper, according to IAIS, sets out good practices related to the organisation and functioning of the supervisor. The objective is to promote proactive supervision.
In response to the public consultation, which ran until December 17, GFIA raised its concerns – pointing to what it believes are possibly detrimental mandates as well as unclear provisions.
“Before, during, and after the financial crisis, the vast majority of (re)insurers engaged and engage in good governance, without the need for more intrusive supervision,” said GFIA in its feedback.
“This paper includes increased mandates that would be costly to implement, overly intrusive, and potentially even blur the line between the supervisor and the private company, to the detriment of both. While intended as guidance, there are provisions that are unclear, subjective, and overly broad.”
In addition, GFIA is of the view that the quality of a firm’s governance is best judged by its actual past performance and not its compliance with new governance reporting. The trade body also sought the addition of a feedback loop between the supervisor and the supervised company.
IAIS, meanwhile, will further develop the paper for finalisation.