IAIS launches final consultation in preparation for ICS

Written by Dan McGrath

23/06/2023

The International Association of Insurance Supervisors (IAIS) has launched the fourth and final public consultation on the Insurance Capital Standard (ICS) as a prescribed capital requirement (PCR) for International Active Insurance Groups (IAIGs).

The adoption of the ICS by the IAIS is set to take place in December 2024, with the aim of building of ‘ICS version 2.0’, which is currently being monitored during a five-year period, and includes changes supported by evidence collected over the three years of monitoring. This includes changes to valuation, capital requirements and capital resources, which were informed by inputs from volunteer groups, colleges of supervisers and other stakeholder engagement efforts.

The ICS as a PCR will provide a consolidated, risk-based measure of capital adequacy for IAIGs. Group-wide supervisors (GWS) will use the ICS as a binding requirement, at the group level, for IAIGs headquartered in their jurisdictions.

Members of the IAIS are committed to the implementation of the association’s standards, with some members taking steps to embed the ICS in their regulatory regimes.

In parallel to this, the US is developing an aggregation method (AM) to a group capital calculation, which, if deemed comparable, will be considered an outcome-equivalent approach for implementation of the ICS as a PCR.

In addition to feedback on the standard itself, the IAIS is collecting input on the foreseeable economic impact of the ICS implementation. This input will then inform the ICS Economic Impact Assessment, which will evaluate the effects that the implementation of the ICS may have on product availability, insurers’ business models and financial markets.

Furthermore, the IAIS has released the 2023 ICS and AM data collection packages, which previously launched in April with volunteer groups. Submissions are due at the end of August.

Executive committee chair at IAIS, Vicky Saporta, said: “After ten years of development, three consultations, six field-testing exercises and three years of confidential reporting, I am pleased that the executive Committee of the IAIS has agreed on the candidate ICS as a PCR for a final public consultation.

“Once adopted at the IAIS Annual General Meeting at the end of 2024, the ICS will provide a common language for cross-border supervisory discussions on insurance group solvency in a world where we face many common and interconnected global risks.”

Related Articles