Current Challenges in Financial Regulation and Supervision

1
Current Challenges in Financial Regulation and
Supervision an IAIS Perspective

• Peter Braumüller
• Chairman of the IAIS Executive Committee
• 2010 Annual Conference of Macedonian Stock
  Exchange
• 30 April 2010

2
Content

• The International Association of Insurance
  Supervisors (IAIS) - structure and objectives
• Current global challenges
• IAIS Responses
• Outlook

3
The 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

4
Key IAIS objectives
Global financial stability
Fair, safe and stable insurance markets
Policyholder protection
Well-regulated and well-supervised insurance
markets
Improved supervision through standard
implementation
5
Current Global Challenges

• Systemic Risk and Insurance
• Macroprudential Supervision
• Group-wide Supervision
• Supervisory Cooperation
• Standard Implementation
• New Global Supervisory Architecture

6
Systemic 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

7
Macroprudential 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

8
Group-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

9
Supervisory 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

10
Standard 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

11
New 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

12
Outlook

• 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