High-level meeting on global insurance standards and supervisory priorities in the Americas, Santiago de Chile, 20 April 2017
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS), together with the International Association of Insurance Supervisors (IAIS) and the Association of Insurance Supervisors of Latin America (ASSAL), held its first high- level meeting in the insurance sector. The event was hosted by the Chilean Superintendence of Securities and Insurance, with representatives from insurance supervisory authorities in the region meeting in Santiago de Chile to discuss global insurance standards and supervisory priorities in the Americas.
Ms Victoria Saporta, Chair of the IAIS Executive Committee, outlined the recent standard-setting work of the IAIS. She focused on ComFrame - the Common Framework for the supervision and regulation of internationally active insurance groups - and the global Insurance Capital Standard (ICS), both of which are scheduled for adoption in late 2019. In this context, she highlighted that "supervisory exchange is integral to strengthening supervision and responding to innovation. By learning from our peers, sharing information, and getting together in forums both virtual and physical, we learn".
Mr Yoshihiro Kawai, Secretary General of the IAIS, emphasised the importance of regulatory convergence as a way to strengthen the resilience of internationally active insurance groups, promote a level playing field and facilitate supervisory cooperation. He invited ASSAL members to increase their involvement in the standard setting and other workstreams of the IAIS.
Participants around the table shared their experiences and challenges in modernising and adapting their regulatory regimes to international standards. Some countries have launched or are in the process of introducing new solvency frameworks, while others are planning to implement risk-based approaches to capital over a longer time horizon.
Another supervisory priority for the region is the supervision of reinsurance and reinsurers. This is particularly relevant to the countries that have opened up their borders to foreign reinsurers, many of which are internationally active. Assessing their quality is essential, but the tools for doing so are often limited. Supervisory cooperation across borders is evolving, and many regulatory frameworks are in the process of being updated with more stringent confidentiality requirements to enable them to safely exchange information between themselves.
The last topic of the meeting was related to fintech innovations. The financial sector is rapidly changing, with new technologies and possibilities developing at the same time as new risks are emerging. The insurance penetration rates in the region are set to increase as digital technology makes it possible to reach broader markets at more affordable cost. Several countries in the region already have startups and "sandboxes", which are being followed closely so as to assess the risks without stifling the potential positive effects of innovation and competition.
Mr Fernando Restoy, Chairman of the FSI, closed the meeting by concluding that the international standard-setting agenda is ambitious and that there have been some impressive reforms in the region. He added that further action would, however, be needed to cope with a fast-changing landscape To keep up with developments, ideally staying ahead of the curve, risk-sensitive approaches are necessary, but supervisors also need to enhance their capacity to better assess the quality of insurers' risk management practices, the adequacy of their technical provisions, and the quality and relevance of their reinsurance contracts, to mention but a few of the supervisory duties that are essential for effective supervision.
Mr Carlos Pavez, President of ASSAL and Superintendent of the Superintendence of Securities and Insurance of Chile, reiterated ASSAL's commitment to the IAIS-led standards review process, highlighting the opportunities for its members to participate in IAIS working groups. He emphasised the importance of maintaining the collaborative and coordinated work that the member regulators of ASSAL are undertaking, as well as the leadership that its board of directors must uphold in order to represent the interests of its members.
This event was co-chaired by Mr Restoy and Mr Pavez. The meeting was attended by representatives from the insurance authorities of Argentina, Bolivia, Brazil, Chile, Costa Rica, the Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Panama, Paraguay, Peru, Portugal, Puerto Rico, Spain and Uruguay.
Note to editors
The FSI was jointly created in 1998 by the BIS and the Basel Committee on Banking Supervision to assist supervisors around the world in improving and strengthening their financial systems.
The FSI is located in Basel, Switzerland.
The FSI offers an extensive annual programme of activities and events in Switzerland and around the world, with different audiences and areas of focus depending on the nature of the event.
For further information on the FSI, visit www.bis.org/fsi.