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

230 Apr 2010

ContentContent

• The International Association of Insurance Supervisors (IAIS) - structure and objectives

• Current global challenges

• IAIS Responses

• Outlook

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

430 Apr 2010

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

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

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

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

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

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

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

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

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