On 6-7 September 2012, EIOPA in cooperation with the International Center for Insurance Regulation (ICIR) organised a Conference on Global Insurance Supervision.
The objective of the conference was to encourage the exchange between supervisors and the insurance industry on such issues as supervisory convergence worldwide, similarities and differences between several jurisdictions as well as benefits from supervisory convergence for both supervisors and insurance undertakings.
The event took place in the Goethe University Frankfurt and attracted around 100 participants.
The conference consisted of three sessions:
I. Group Supervision: Colleges of Supervisors
During the session it was pointed out that colleges of supervisors are used in different regimes. In their work, colleges of supervisors face two big challenges: firstly, information sharing strictly subject to confidentiality requirements and secondly, efficient and effective interaction within the (re)insurance group itself. Supervisors should not only share information, but come to a common view on the risk profile of the group as well. Furthermore, there is a need for more global consistency and coordination with regard to the functioning of colleges. The Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) could foster and enhance the evolution of international colleges.
II. Regulatory Convergence
Participants agreed that global supervisory standards should be able to deal flexibly with economic turbulence and also take into account the differences in political frameworks and regulatory/supervisory culture in the various jurisdictions. On the one hand, insurance products will always have a “national touch” and are developed to serve the needs of local clients. On the other hand, international companies strive to optimize the use of resources to achieve compliance with local regimes; from this point of view, a global standard could contribute to enhancing efficiency. Global standards, however, also need to be looked at from the angle of establishing a global level playing field, to avoid regulatory arbitrage and competitive advantage. It is equally important to keep an eye on the proportionate application of global standards: Local small and medium-sized enterprises may see the implementation of a global standard as only causing additional costs without bringing decisive benefits to them as they are not internationally active.
III. Systemic Relevance of Insurers
Panellists discussed the definition of systemic risk and different factors that can make a (re)insurance company systemically important. The work of the International Association of Insurance Supervisors (IAIS) in the field of Global Systemically Important Financial Institutions (g-SIFIs) and in particular globally systemically important ((re)insurers (g-SIIs) was presented to the participants. The IAIS is developing an approach to a) identify such companies and b) establish relevant supervisory measures to be applied for future designated g-SIIs. Final decisions on g-SIIs are to be taken by the Financial Stability Board (FSB) in consultation with national supervisors, most probably next year.