ICP 23 Group-wide Supervision

The group-wide supervisor, in cooperation and coordination with other involved supervisors, identifies the insurance group and determines the scope of group supervision.

23.1

The group-wide supervisor, in cooperation and coordination with other involved supervisors, identifies all legal entities that are part of the insurance group.


23.2

The group-wide supervisor, in cooperation and coordination with other involved supervisors, determines the scope of group-wide supervision.


23.2.1    

Involved supervisors should consult and agree on the scope of group-wide supervision of the insurance group to ensure that there are no gaps and no unnecessary duplication in supervision among jurisdictions.

23.2.2    

A practical method to determine the entities to capture within the scope of group-wide supervision is to start with entities included in the consolidated accounts. Entities that are not included in consolidated accounts should be included if they are relevant from the perspective of risk (non-consolidated entities also subject to supervision) or control. The entities that may be captured within the scope of group-wide supervision may either be incorporated or unincorporated.

23.2.3    

In considering the risks to which the insurance group is exposed it is important to take account of those risks that emanate from the wider group within which the insurance group operates.

23.2.4    

Individual entities within the insurance group may be excluded from the scope of group-wide supervision if the risks from those entities are negligible or group-wide supervision is impractical.

23.2.5    

The exclusion or inclusion of entities within the scope of group-wide supervision should be regularly re-assessed.

​23.2.6     
It should be noted that the supervisory approach to entities/activities within the insurance group may vary depending on factors such as their types of business, legal status and/or nature, scale and complexity of risks. Although an insurance group as a whole should be subject to group-wide supervision, not all quantitative and qualitative supervisory requirements applied to an insurance legal entity should necessarily be applied to other entities within the group, to the insurance group as a whole, or to a sub-group collectively.

​CF 23.2.a    
In conducting group-wide supervision, the group-wide supervisor obtains information necessary to apply standards to the Head of the IAIG concerning all the legal entities controlled by the Head of the IAIG (the IAIG) including from:
  • the Head of the IAIG;
  • with the cooperation of other involved supervisors, insurance legal entities controlled by the Head of the IAIG; and
  • other non-insurance legal entities, whether or not controlled by the Head of the IAIG.
The group-wide supervisor decides from which legal entities information should be sought.

CF 23.2.a.1    
The group-wide supervisor may need to obtain information about related group entities, such as:
  • any intermediate holding company or ultimate parent of the Head of the IAIG;
  • any significant owner of the IAIG;
  • any person exerting significant influence over the IAIG;
  • any financial entity which is subject to supervision by an authority other than an insurance supervisor; or
  • entities excluded from the consolidated data used to assess group solvency.

​CF 23.2.a.2    
Where there are entities related to the Head of the IAIG from which information is necessary for supervisory purposes, then the group-wide supervisor should obtain that information from those entities or from other sources, for example:
  • the Head of the IAIG (insofar as the Head of the IAIG can legally procure that information);
  • any supervisor of a related non-insurance financial entity; or
  • the members of the Board, Senior Management and Key Persons in Control Functions involved in the insurance business, irrespective of the entity employing those persons.

​CF 23.2.a.3    
The group-wide supervisor should understand how risks in non-regulated related group entities affect, for example, the risk management and capital adequacy of the IAIG. However this does not require the group-wide supervisor to supervise directly such entities.

23.3

The group-wide supervisor and other involved supervisors do not narrow the identification of the insurance group or the scope of group-wide supervision due to lack of legal authority or supervisory power over particular legal entities.

23.3.1    

In some jurisdictions, the supervisor may not be granted legal authority or supervisory power for the direct supervision of some entities within the identified insurance group or the scope of group-wide supervision. These may include legal entities regulated in another sector or non-regulated entities within the same jurisdiction.

23.3.2    
Where a supervisor has no direct legal power over certain legal entities in the scope of the group-wide supervision, the supervisor will use its power over regulated entities and/or consult with other involved supervisors to obtain similar supervisory outcomes.

Illustrations to assist the identification of insurance groups
 
Figure 23.1 Insurance Group

Figure 23.2 Financial Conglomerate

Figure 23.3 Insurance-led Financial Conglomerate

Figure 23.4 Wider group