Speakers
Context and objectives of the session
The European insurance regulatory framework, Solvency II, is under review as it coincides with the need for significant financing in the transition to low-carbon and digital economies. Policymakers aim to reduce volatility in the framework and allow insurers to invest in the economy without jeopardizing financial stability.
Globally, the International Association of Insurance Supervisors (IAIS) has been working on the Insurance Capital Standard (ICS) since 2013. The ICS aims to create a common language for supervising internationally active insurance groups (IAIGs) and promote convergence in capital standards. However, achieving a unified standard has been challenging due to competition and comparability concerns.
Developing a single ICS is difficult due to differences in national and regional frameworks, leading to disparities in insurer capitalization across jurisdictions. Achieving global convergence necessitates harmonizing accounting practices, reporting standards, and risk assessment methods, which can be politically sensitive.
Some regulators are cautious about adopting a uniform global standard, fearing it may not address their specific market conditions or risks. National interests and competitiveness further complicate matters, as regional industry associations may seek adjustments to the frameworks.
Balancing the interests of industry stakeholders with global financial stability is a complex task for policymakers. The IAIS has established criteria to compare Aggregation Method outcomes with the ICS.
In summary, the text discusses the need to revise Solvency II, challenges in establishing a global insurance standard, and the delicate balance policymakers must strike to ensure fair competition while preserving financial stability.
Questions to be addressed.
- How can policymakers reduce volatility in the Solvency II framework while enabling insurance companies to invest in the economy without risking financial stability?
- What challenges and concerns surround the development of a unified global insurance capital standard (ICS), and how can international regulatory bodies address them to achieve convergence among different national frameworks?
- How can regulators strike a balance between the interests of industry stakeholders, including regional insurance associations and trade groups, and the goal of ensuring global financial stability while maintaining fair competition in the insurance market?