Established in 1994, the IAIS represents insurance regulators and supervisors

Established in 1994, the IAIS represents insurance regulators and supervisors of more than 200 jurisdictions in nearly 140 countries, constituting 97% of the world's insurance premiums. Its objectives are to:

• Promote effective and globally consistent supervision of the insurance industry 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

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ICP 1 Objectives, Powers and Responsibilities of the Supervisor

The authority (or authorities) responsible for insurance supervision and the objectives of insurance supervision are clearly defined.

1.1	Primary legislation clearly defines the authority (or authorities) responsible for insurance supervision.

1.1.1

The authority (or authorities) responsible for insurance supervision should be clearly identified in primary legislation. Where there are multiple authorities responsible for insurance supervision (e.g. separate authorities for prudential and market conduct supervision, for macro and micro prudential supervision, or for licensing and ongoing supervision), it is important that the institutional framework and the responsibilities of the respective authorities are clearly set out in legislation for clarity and to ensure all the objectives of insurance supervision are met.

1.2

Primary legislation clearly defines the objectives of insurance supervision and the mandate and responsibilities of the supervisor and gives the supervisor adequate powers to conduct insurance supervision, including powers to issue and enforce rules by administrative means and take immediate action.

1.2.1

Publicly defined objectives foster transparency. With this basis, the public, government, legislatures and other interested bodies can form expectations about insurance supervision and assess how well the authority is achieving its mandate and fulfilling its responsibilities.

1.2.2

Being entrenched in primary legislation ensures that the mandate and functions of the supervisor cannot be changed on an ad-hoc basis. The process of periodically updating the primary legislation can promote transparency by way of public discussions on relevant issues; however, if done too frequently, stakeholders may form the impression that the policymaking process is unstable. Therefore, it would be prudent to avoid being overly specific in the primary legislation, which could be supplemented as needed with updated regulations, for example.

1.2.3

Legislation should be clearly specified and sufficiently extended so that the objectives of legal entity and group-wide supervision are allowed for and the supervisor has adequate powers to achieve these objectives.

1.2.4

The objectives of group-wide supervision could be achieved either by direct means where the supervisor has explicit authority and powers over entities within the group, including the head of the group, or via the use of an indirect approach where the supervisor has adequate power and authority over the regulated insurer to access information in respect of the head of and other entities in the group and apply relevant requirements.

1.2.5

As overall coordinator for the supervision of the group, the group-wide supervisor should have sufficient legal power and authorities in place in order to practice supervision on a group-wide basis whilst also effecting coordination and collaboration with other relevant supervisors.

1.2.6

The group-wide supervisor should have sufficient authority and power in order to coordinate and disseminate the essential information needed for reviewing and evaluating risks and assessing solvency on a group-wide basis. A group-wide supervisor ultimately should be responsible for ensuring effective and efficient group-wide supervision.

1.2.7

At a jurisdictional level, it is important that legislation supports the supervisor of an insurer which is part of a group to appropriately contribute to the supervision of that group on a group-wide basis.

1.3	The principal objectives of supervision promote the maintenance of a fair, safe and stable insurance sector for the benefit and protection of policyholders.

1.3.1

While the precise objectives of supervision may vary by jurisdiction, it is important that all insurance supervisors are charged with the objective of protecting the interests of policyholders.

1.3.2

Often the supervisor’s mandate includes several objectives. As financial markets evolve and depending on current financial conditions, the emphasis a supervisor places on a particular objective may change and, where requested, this should be explained.

1.4	Where, in the fulfilment of its objectives, the supervisor identifies conflicts between legislation and supervisory objectives, the supervisor initiates or proposes correction in legislation.

1.4.1

As markets evolve, the supervisor may identify changes in the environment that affect the fairness, safety or stability of the insurance sector that are not currently addressed by legislation. The supervisor should initiate or propose changes to legislation to ensure supervisory objectives can continue to be achieved.