ICP 10 Preventive Measures, Corrective Measures and Sanctions
10.1 |
The supervisor acts against individuals or entities that conduct insurance activities without the necessary licence.
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10.1.1 |
The supervisor should have in place mechanisms to identify when unlicensed insurance activity is being carried out. Examples of such mechanisms include monitoring of media and advertising, review of consumer complaints or encouraging industry and other stakeholders to notify the supervisor of suspicious activity.
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10.1.2 |
Where unlicensed activity is identified, the supervisor should act to address the issue. Examples include requiring the unlicensed entity to apply for a licence, seeking court orders to require the unlicensed entity to stop the activity, informing law enforcement authorities of criminal and/or civil concerns, imposing sanctions on the individual/entity or publicising the fact that the individual and/or entity is/are not licensed to conduct insurance activities.
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10.2 |
The supervisor requires preventive measures if the insurer seems likely to operate in a manner that is inconsistent with regulatory requirements.
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10.3 |
The supervisor requires corrective measures if the insurer fails to operate in a manner that is consistent with regulatory requirements.
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10.5 |
The supervisor escalates, including enforcing, preventive or corrective measures if its concerns are not addressed by the insurer’s actions.
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10.5.1 |
The supervisor should require further measures if its concerns with the insurer become worse, including if the insurer fails to take the actions in a plan. |
10.5.2 |
Supervisory measures should escalate in line with the supervisor’s concerns about the insurer. If the insurer’s inaction leads to an increased risk to policyholders, then the supervisor should respond by requiring stronger measures to mitigate this risk.
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10.5.3 |
Enforcement of preventive or corrective measures could involve the supervisor issuing a formal direction to an insurer to take particular actions or to cease conducting particular activities. It could also involve the supervisor seeking the assistance of other authorities, or the courts, to enforce a measure.
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CF 10.5.a |
The group-wide supervisor coordinates with other involved supervisors if the Head of the IAIG, or an insurance legal entity within the IAIG, fails to take action to address the group-wide supervisor’s, or other involved supervisor’s, identified concerns.
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CF 10.5.b |
Where an insurance legal entity within the IAIG fails to take preventive or corrective measures, as required by the involved supervisor, the group-wide supervisor informs the Head of the IAIG of that lack of compliance and assists the involved supervisor, to the extent possible, in achieving compliant outcome.
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10.6 |
The supervisor imposes sanctions on insurers and individuals proportionate to the breach of regulatory requirements or other misconduct. |
10.6.1 |
The supervisor should be able to impose a range of sanctions, which could be administrative, civil or criminal in nature. These can include the ability to impose fines, the ability to bar individuals acting in key roles from holding similar roles in future, and the ability to require remediation (such as requiring compensation of policyholders in cases of mis-selling). It is recognised that supervisors will not always be able to take a full range of legally binding actions themselves and may need to act in conjunction with, or refer matters to, other authorities, in particular, in the case of criminal penalties.
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10.6.2 |
In some cases it may be appropriate to apply sanctions against insurers or individuals when justified by their actions, or inactions.
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10.6.3 |
The supervisor should, in particular, be able to impose sanctions against insurers and individuals who:
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10.6.4 |
The sanctions imposed by the supervisor should be commensurate with the nature and severity of the insurer’s non-compliance with regulatory requirements. Administrative or procedural breaches will generally attract less severe sanctions than breaches arising from an insurer’s intentional disregard of regulatory requirements. The sanction imposed should be sufficiently dissuasive so that the insurer, or other insurers, do not commit a similar breach in the future.
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10.6.5 |
The supervisor should impose more severe sanctions relative to the gravity of the breach where an insurer’s history demonstrates a pattern of non-compliance with regulatory requirements.
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10.6.6 |
The supervisor may impose sanctions on insurers or individuals in addition to supervisory measures or in the absence of supervisory measures.
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10.6.7 |
The imposition of sanctions against an insurer or an individual typically should not delay either supervisory measures or insurer action taken in response to supervisory measures. However, in some instances, the nature of the sanctions may delay supervisory measures. For example, where a supervisor sanctions an insurer by requiring a number of Senior Managers to be replaced with new individuals, supervisory measures intended to improve the governance of the insurer may not be practical until after the new individuals are appointed.
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10.6.8 |
The supervisor, or another responsible authority in the jurisdiction, should take action to enforce sanctions that have been imposed.
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10.6.9 |
The supervisor should sanction insurers and individuals within a consistent framework, so that similar violations and weaknesses attract similar sanctions. Supervisors should consider how proposed sanctions relate to previous cases. The supervisor should identify precedents where the supervisor has sanctioned an insurer or individual for similar actions/inactions. Where the supervisor has sanctioned an insurer or individual for similar actions/inactions, then the supervisor should consider carefully whether a comparable sanction is appropriate. If the supervisor concludes that a very different sanction is appropriate, the supervisor should be prepared to explain why it reached this conclusion.
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10.6.10 |
In order for sanctions to have a deterrent effect on other insurers, the fact of the sanction, and sufficient details of the breach, should in general be published. However, the supervisor should retain the discretion to take a different course of action (for example, not to publish, or to delay publication) where this would further the achievement of supervisory objectives or it is otherwise in the public interest to do so.
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CF 10.6.a |
The group-wide supervisor imposes sanctions directly on the Head of the IAIG within the group-wide supervisor’s jurisdiction.
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CF 10.6.a.1 |
Available sanctions should include the imposition of fines and penalties (even if non-compliance by the Head of the IAIG is due to the actions of a legal entity within the IAIG).
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CF 10.6.a.2 |
The group-wide supervisor should have flexibility in how it imposes sanctions, which may need to vary according to the legal structure of the group, the jurisdiction in which the legal entities in the group are established, and the supervisory authority over relevant parts of the group.
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CF 10.6.a.3 |
If the Head of the IAIG is not located in the jurisdiction of the group-wide supervisor, the group-wide supervisor should use indirect powers to impose sanctions.
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CF 10.6.b |
An involved supervisor communicates with other involved supervisors before imposing sanctions on:
if the sanction will have a material effect on the supervision of the IAIG as a whole or a material effect on the supervision of another insurance legal entity within the IAIG, unless exceptional circumstances preclude such communication.
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CF 10.6.b.1 |
The involved supervisor should communicate the need for sanctions to other involved supervisors at the earliest opportunity. Where an involved supervisor must act before communicating the need for sanctions, that supervisor should inform the group-wide supervisor and other involved supervisors of the sanction, and the supporting rationale, as soon as possible.
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