In September we reported on what the
Association of British Insurers (ABI) described as a serious stalemate with regards to agreement on a single Insurance Capital Standard (ICS). Now the trade body has welcomed the latest development, after the International Association of Insurance Supervisors (IAIS) revealed a new two-phased approach.
In essence, the IAIS has reached an agreement putting in place a five-year monitoring phase prior to an implementation phase as it relates to version 2.0 of the ICS.
“This pivotal agreement responds to a call from members and stakeholders for more clarity on what the implementation of Insurance Capital Standard (ICS) version 2.0 will mean in practice,” said IAIS when it announced “a unified path to convergence” of group capital standards.
Weeks prior to the announcement, chief executive of the US organisation National Association of Insurance Commissioners (NAIC) Mike Consedine was quoted by
Reuters as saying: “The sense is there has been a collective pause around the ICS following elections in the United States and the European Union, as well as Brexit.”
Now the IAIS is bent on achieving the ultimate goal of a common ICS, with executive committee chair Vicky Saporta saying they have made significant progress. Saporta, who is also executive director of prudential policy at the Bank of England, added that IAIS has reflected the priorities of its members.
“The five-year monitoring period will allow IAIS to continue to test and refine the Standard, resulting in a more appropriate and workable approach,” commented Hugh Savill, ABI director of regulation. “Equally important the confirmation that insurers will be able to use internal models is a significant step in the right direction and will allow for more a more accurate reflection of insurers’ risk profiles.”
Savill added: “This breakthrough illustrates the active role played by the Bank of England in international regulation, and the progress made under Victoria Saporta’s leadership at the IAIS.”
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