With the December 2024 date for the adoption of Insurance Capital Standard (ICS) approaching, the Executive Committee of the International Association of Insurance Supervisors (IAIS) has agreed on an initial plan for ICS implementation.
The IAIS says in a statement that it will provide support to its members to facilitate their implementation of the ICS, which will serve as a consolidated, risk-based measure of capital adequacy for Internationally Active Insurance Groups (IAIGs). It forms the quantitative element of the Common Framework for the Supervision of IAIGs (ComFrame), the qualitative element of which was adopted in 2019.
The IAIS has set high-level timelines for its plans to assess the comprehensive and consistent implementation of the ICS across jurisdictions. These timelines recognise that it will take some time for jurisdictions to finalise any necessary regulatory and supervisory changes to align with the ICS, taking into account jurisdictional circumstances, and for the IAIS to prepare for implementation assessment.
The IAIS Executive Committee agreed that ICS implementation assessment will follow a two-step approach, mirroring the successful model used for the IAIS’s implementation assessment of the Holistic Framework supervisory material, the IAIS’ standards for macroprudential supervision that were adopted in 2019. In 2026, the IAIS will coordinate a baseline self-assessment by IAIS members of their progress in implementing the ICS, which will serve as a baseline for future implementation progress monitoring. The IAIS will then aim to start in-depth targeted jurisdictional assessments in 2027.
Assessment
In preparation, the IAIS will also begin developing a detailed ICS implementation assessment methodology in 2025, leveraging the IAIS’s general principles and methodologies for assessing its standards, while taking into account the quantitative nature of the ICS. Recognising that the assessment should not be a line-by-line exercise, the methodology will specify an appropriate level of granularity and articulate the quantitative and qualitative analyses to be used in the assessment.
The IAIS will undertake further work this year to define the need for and scope of any future ICS-related data collection from insurance groups and group-wide supervisors that may be necessary to facilitate the consistent implementation of the ICS. While the scope of such potential data collection has yet to be defined, by its nature, any such data collection would be more targeted than the data collection undertaken during the monitoring period, which supported the development of the ICS.
The IAIS has published the 2024 data collection package, which was released to volunteer groups in April. The package provides a clear indication of the final ICS set for adoption in December. It integrates policy changes from the 2023 version, informed by data and feedback collected from volunteer groups, supervisory colleges, and other stakeholders during the monitoring period.
Aggregation Method
In parallel with the finalisation of the ICS, the US is developing an Aggregation Method (AM) for group capital adequacy, which, if deemed comparable, will be considered an outcome-equivalent approach for the implementation of the ICS. Issues related to the implementation assessment of an AM will be considered by the IAIS once there is greater clarity on the outcome of the AM comparability assessment and the overall ICS implementation assessment methodology.