06 December 2024

IAIS adopts Insurance Capital Standard and other enhancements to its global standards to promote a resilient insurance sector

IAIS adopts first comprehensive global capital standard for insurance supervision, the Insurance Capital Standard (ICS), providing a risk-based measure of capital adequacy for internationally active insurance groups (IAIGs).

• IAIS also adopts important updates to existing qualitative global standards for insurance supervision, the Insurance Core Principles and ComFrame, which are applicable to the supervision of the insurance sector as a whole, and of IAIGs, respectively. The updates relate to climate risk, recovery and resolution, and valuation and capital adequacy.
• The adoption of these standards underscores IAIS’ ongoing efforts to promote a resilient insurance sector and contribute to global financial stability.

Cape Town, South Africa – At its Annual General Meeting today, the International Association of Insurance Supervisors (IAIS) adopted the global Insurance Capital Standard (ICS). Additionally, members endorsed substantial updates to the IAIS Insurance Core Principles (ICPs) and Common Framework for the supervision of internationally active insurance groups (ComFrame). This significant milestone marks a major advancement in insurance supervision – enhancing financial stability and building a more resilient global insurance sector to better serve and protect policyholders around the world.

“The adoption of the ICS and these updated standards represent a pivotal moment for the global insurance sector,” said Shigeru Ariizumi, IAIS Executive Committee Chair. “Taken together they will better safeguard the interests of policyholders and enhance financial stability at a time when a strong and resilient insurance sector is critical to tackling pressing societal challenges.”

The Insurance Capital Standard
The ICS provides a globally comparable risk-based measure of capital adequacy for internationally active insurance groups (IAIGs) and forms the quantitative element of ComFrame. It will serve as a group-wide prescribed capital requirement, which is a solvency control level below which supervisors will intervene on group capital adequacy grounds.

The ICS will help ensure that IAIGs maintain sufficient capital to withstand potential stresses and thereby protect policyholders. It will also provide a consistent and transparent framework for supervisors to evaluate the financial soundness of IAIGs. Currently, there are 59 IAIGs identified by group-wide supervisors from 18 jurisdictions across the globe. These are often complex groups operating across multiple jurisdictions and regions, which amplifies the importance of having a common language for solvency supervision.

The specifics of the ICS have been adopted in the Level 1 text setting out the overarching principles and concepts of the ICS, and the Level 2 text providing detailed specifications.

 

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