The International Association of Insurance Supervisors (IAIS) Executive Committee has approved the final version of the Insurance Capital Standard (ICS) as a prescribed capital requirement for internationally active insurance groups (IAIGs), which will be recommended for adoption at the IAIS Annual General Meeting on 5 December 2024.
“Arriving at an agreement on a global Insurance Capital Standard as a prescribed capital requirement is a landmark achievement for the IAIS,” said Shigeru Ariizumi, IAIS Executive Committee Chair. “This decision reflects our unwavering commitment to enhancing global insurance supervision and ensuring the resilience of the insurance sector.”
The ICS forms the quantitative element of ComFrame, the Common Framework for the supervision of IAIGs. The qualitative elements of ComFrame, including governance and risk management, were adopted in 2019.
Two minor amendments have been made for the final ICS compared to the one used for the last data collection of the monitoring period, which was published in June this year. These amendments are for the mapping of credit risk ratings and the determination of non-insurance risk.
The IAIS Executive Committee has also completed the assessment of whether the Aggregation Method (AM), developed by the United States (US), provides comparable outcomes to the ICS.
In finalising the comparability assessment, the IAIS has concluded that a US AM provides a basis for implementation of the ICS to produce comparable outcomes. The comparability assessment of the provisional AM has highlighted some areas where work as part of implementation of the final AM will help ensure convergence, specifically treatment of interest rate risk and appropriate timing of supervisory intervention. In using the final AM as its implementation of the ICS, the US commits to addressing those areas in appropriate ways, which will be reviewed during the IAIS ICS implementation assessment process.
The IAIS has also published a report on the AM comparability assessment, which outlines the approach followed for the assessment and provides more detail on the areas that were assessed as providing comparable outcomes and, in some circumstances, divergent outcomes where work as part of implementation of the final AM will help ensure convergence with the ICS. This press release should be read together with the AM comparability assessment report.
As the final AM will be the US’ implementation of the ICS, the assessment of its implementation will be subject to the same timing as ICS implementation assessments in other jurisdictions (ie self-assessment in 2026 and intensive targeted jurisdictional assessments aiming to start in 2027, upon agreement of the relevant jurisdictions) and subject to a consistent methodology (including both qualitative and quantitative analysis), assessing whether the jurisdictional implementation at least meets the ICS (ie produces at least the same level of prudence as the ICS and similar triggers of supervisory intervention), whilst also focusing on the AM specificities.
The IAIS will continue to work closely with its members to ensure a smooth transition to the ICS and to provide necessary guidance and support throughout the implementation process.
The agreed ICS will be presented for adoption at the upcoming IAIS Annual General Meeting on 5 December in Cape Town, South Africa. Further details on the finalisation of the ICS and the AM comparability assessment, as well as the planned implementation, will be presented at the IAIS Annual Conference, 5-6 December in Cape Town.
