Insurance associations say IAIS supervision proposal 'overly intrusive'
Source: Middle East Insurance Review | Jan 2019
The Global Federation of Insurance Associations (GFIA) has warned that the increased supervisory mandates included in an International Association of Insurance Supervisors (IAIS) draft application paper on proactive supervision of corporate governance, would be costly to implement and overly intrusive. They could potentially even blur the line between the supervisor and the insurer, to the detriment of both, said the GFIA in a statement responding to the IAIS paper.
In addition, while the application paper is intended as guidance, there are provisions in it that are unclear, subjective and overly broad, said the GFIA.
In November 2018, the IAIS called for feedback on its draft ‘Application Paper on Proactive Supervision of Corporate Governance’. It said that the outcome of the IAIS Self-Assessment and Peer Review (SAPR) conducted in 2014 underlined the need for additional guidance on supervisory practices related to corporate governance that are proactive and sufficiently robust. Some issues identified in the SAPR have been addressed by revisions to two Insurance Core Principles (ICPs), finalised in November 2015.
Still, the draft paper on proactive supervision of corporate governance addresses several areas including:
- Proactive supervision of corporate governance should be carried out proportionately to the issues identified and using an approach customised to the circumstances;
- There are different approaches to foster proactiveness of supervision of corporate governance;
- The supervisor should consider possible ways to improve the supervisory organisation, culture and processes, such as the expertise of the staff and their willingness to act upon relevant findings;
- The supervisor needs to have relevant information to be able to carry out proactive supervision and may consider a range of approaches to gathering such information;
- The supervisor should consider developing an early warning system of potential corporate governance-related indicators, such as the use of yellow and red flags; and
- Effective communication with insurers and the wider public supports proactive supervision of corporate governance.
The IAIS said application papers could be provided in circumstances where the practical application of principles and standards may vary or where their interpretation and implementation may pose challenges. Application papers can provide further advice, illustrations, recommendations or examples of good practice to supervisors on how supervisory material may be implemented. M