Assessing Compliance with ICP 17: Capital Adequacy and Solvency Requirements
Explore the assessment process for ICP 17, focusing on capital adequacy and solvency requirements imposed by supervisors to ensure insurers can absorb unforeseen losses and allow for regulatory intervention. Key elements include regulatory capital determination, criteria for capital quality, and guidance on internal models.
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Presentation Transcript
Assessing compliance with ICPs ICP 17 Rogier Derksen 24 May 2016
Overview Background on the Exercise ICP 17 Developing Action Plans 2
Assessing against the objective The Three P s Essential Components Questions Framework Do I have the power to achieve the objective of the standard? Is the power have the force of legislation? Is it fully and clearly elaborated? Policies and Procedures Do I have the policies and procedures that put the power in practice in support of the objective? Supervisory Practice Do I undertake the practices to achieve the objective? 4
Assessment Categories IAIS Assessment Categories Assessment Category Elaboration Observed All essential criteria observed Largely observed Only minor shortcomings exist Partly observed Despite progress, shortcomings sufficient to raise doubts How is the objective assessed? Do I have the legal framework? Do I have the policies and procedures to put the power into practice? Not applicable Not applicable due to structural/ legal/ institutional features or responsibility with other authorities Not observed No substantive progress 5
ICP 17: Capital Adequacy ICP 17 Solvency The supervisor establishes capital adequacy requirements for solvency purposes so that insurers can absorb significant unforeseen losses and to provide for degrees of supervisory intervention. Applies to insurance legal entities and any risks posed by non-insurance entities on insurance groups Total balance sheet approach Establishment of regulatory capital requirements control levels and triggers for intervention (SCR/PCR, MCR) Transparent determination of regulatory capital Roles of technical provisions and regulatory capital clarified Criteria for assessment of availability and quality of capital Standards and guidance on use of internal models 7
Key Questions? 1.What is ISD s Observance level? 2.How can ISD improve its observance? Long term Short term 3.Any other observations? 9
