Public Consultation on the draft definition and high-level principles to inform the criteria that will be used to assess whether the Aggregation Method provides comparable outcomes to the Insurance Capital Standard

Public Consultation: Comments due by 22 January 2021

Background

In November 2017, the IAIS set out an agreement on the implementation of Insurance Capital Standard (ICS) Version 2.0, including a unified path to convergence of group capital standards in furtherance of its ultimate goal of a single ICS that achieves comparable outcomes across jurisdictions.[1]  The agreement acknowledges the development by the United States of the Aggregation Method (AM) to a group capital calculation. While the AM is not part of the ICS, the IAIS aims to be in a position by the end of the monitoring period to assess whether the AM provides comparable (ie substantially the same (in the sense of the ultimate goal)) outcomes to the ICS. If so, it will be considered an outcome-equivalent approach for implementation of ICS as a prescribed capital requirement (PCR). At the same time, the IAIS agreed to help collect data from the US and interested jurisdictions that will aid in the development of the AM.

In November 2019, the IAIS agreed on a process and timeline for developing criteria to assess whether the AM provides comparable outcomes to the ICS. As previously communicated in an Explanatory Note, the IAIS agreed on a draft definition of comparable outcomes and an overarching approach (ie areas of focus) to guide the development of high-level principles and criteria. Based on the draft definition and overarching approach, the IAIS has developed draft high-level principles to inform the criteria that will be used to assess whether the AM provides comparable outcomes to the ICS. The draft definition of comparable outcomes and the draft high-level principles are the subject of this consultation. The consultation was previously scheduled for mid-2020, but due to the Covid-19 pandemic, the IAIS rescheduled the consultation in order to provide operational relief to member supervisors, insurers and other stakeholders. 

Following consideration of comments on the draft definition and draft high-level principles, the IAIS will develop the draft criteria that will be used to assess whether the AM provides comparable outcomes to the ICS. More detailed criteria will be developed for each high-level principle and in such a manner that the AM is neither precluded at the outset as an outcome equivalent approach to the ICS for measuring group capital, nor given a free pass. There will be a public consultation on the draft criteria in advance of the assessment of whether the AM provides comparable outcomes to the ICS.

A public background session will take place during the IAIS Annual Conference Town Hall Session on 3 December 2020 to introduce the material published for consultation. Registration details for the IAIS Annual Conference are available on the IAIS website.Click here.

How to provide feedback:

Please use the Consultation Tool at the bottom of this page for recording responses. This page also includes a Word template for use in developing responses prior to recording them using the Consultation Tool. Instructions for use are available when you access the Consultation Tool. Please note that only comments submitted through the Consultation Tool will be considered. All comments will be published on the IAIS website unless an option in the Consultation Tool to keep comments confidential is selected.

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