The sector needs solid regulations to enable growth and protect low income consumers.
By Yoshi Kawai, Secretary General, IAIS, Switzerland
The International Association of Insurance Supervisors (IAIS) provides a globally accepted framework for the supervision of the insurance sector. This October, the IAIS will be releasing 26 revised Insurance Core Principles, with corresponding standards and guidance for adoption by all 190 member jurisdictions.
This indeed is a great milestone in the history of the IAIS. We encourage the implementation of these principles and standards in order to develop and maintain fair, safe and stable insurance markets for the benefit and protection of policyholders and to contribute to global financial stability.
Recognising that the Insurance Core Principles are universally applicable regardless of the level of development or sophistication of the insurance markets, we recommend that supervisory measures be appropriate to the supervisory objectives. In addition, supervisory requirements should be commensurate with the risks posed by individual insurers, as well as the potential risks posed by the insurers to the system as a whole. Therefore, it is recognised that supervisors will need to mould certain supervisory requirements in accordance with the nature, scale and complexity of the risks inherent to the individual insurers (i.e. the proportionality principle).
As we continue to seek a healthy balance of regulation and continued access to quality insurance products while simultaneously protecting policyholders, we are cognizant of an increase in the regulatory burden for many supervisors. In this regard, we encourage a proportionate and risk-based approach such that compliance costs are not prohibitive in practice, and innovation, particularly in product and delivery of microinsurance, is not thwarted in the long run.
Since the ways and means of implementing the newly revised Insurance Core Principles will vary across jurisdictions, the IAIS-Microinsurance Network joint working group is developing an application/guidance paper to assist regulators in achieving their objectives of enhancing access to insurance markets, and contributing to policyholder protection and global financial stability.