February 16, 2006 by Canadian Underwriter
The International Association of Insurance Supervisors (IAIS) established in 1994 to develop international principles and standards for insurance supervision has issued a paper that outlines a work plan and timetable for the development of international supervisory standards on insurance solvency assessment.
The paper is entitled Roadmap for a Common Structure and Common Standards for the Assessment of Insurer Solvency. It sketches how the IAIS plans to build upon the details elaborated in a previous publication. The earlier paper discusses the enhancement of transparency and comparability of insurers’ solvency situations and of solvency regimes worldwide to the benefit of consumers, the industry, investors and other interested parties.
Tom Karp, chairman of the IAIS technical committee said: “The IAIS places high priority on this work plan, which extends over a number of years, and charts the course for future work to deliver a common structure and standards for insurer solvency assessment. It will support and enhance transparency and convergence of solvency standards for insurers worldwide.”
The paper notes further financial standards will need to be discussed in the following four main areas of insurer solvency assessment:
the determination of insurance liabilities and technical provisions
the determination of capital requirements
the suitability and valuation of assets for insurers
recognition and valuation of forms of capital.
Also, three governance standards that are specifically relevant to insurer solvency assessment include:
governance and risk management, including internal control, by insurance companies
asset-liability management by insurers
use and validation of internal models.
Work on Market Conduct Standards is also underway, addressing such issues as:
treating customers fairly
constructive liabilities, and misselling.