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Insurance Core Principles

Last Updated 1/22/2019

The Insurance Core Principles (ICPs) developed by the International Association of Insurance Supervisors (IAIS) provide a globally accepted framework of principles, standards, and guidance for the regulation and supervision of the insurance sector. The IAIS was established in 1994 to promote cooperation among insurance supervisors around the globe and with supervisors in other financial sectors and includes as members insurance regulators and supervisors of more than 200 jurisdictions in nearly 140 countries.

Overview
The IAIS ICPs set out the fundamentals of effective insurance supervision. They serve as a basic benchmark for insurance supervisors in all jurisdictions and can be used when establishing a supervisory regime or for identifying areas in existing regimes that need to be improved. They are intended to be flexible enough to apply to the variety of insurance supervisory regimes, regardless of maturity, as well as to both insurance legal entities and insurance groups. They apply to the supervision of insurers whether private or government-controlled insurers that compete with private enterprises, wherever their business is conducted, including through e-commerce.

The ICP material is presented in order that the hierarchy can be clearly understood. Principle statements, at the highest level in the hierarchy, describe the essential elements of a supervisory regime to promote a well-functioning insurance sector. Standards set out the key, high level requirements for successfully implementing the ICPs. Standards must be met to demonstrate full observance with core principles. Guidance material, the lowest level in the hierarchy, elaborates on the meaning of a standard and provides examples of possible ways to comply with or implement a principle statement or standard.

The ICPs are used in the evaluation of supervisory regimes under the Financial Sector Assessment Program(FSAP) conducted jointly by the World Bank and the International Monetary Fund (IMF). The FSAP is a comprehensive and in-depth analysis of a country's financial regulatory sector. The World Bank and the IMF rely on internationally recognized standards as a way to measure observance with accepted practices. For insurance, the ICPs form the basis for the assessment of insurance regulators' observance of international standards. The IAIS also conducts its own assessment program, which was recently enhanced to better support members' implementation efforts. These assessments include: the Peer Review Process, which relies on self-assessment questionnaires; the Policy Measures Assessment, which is specific to policy measures for global systemically important insurers; and the Member Assessment Process, which incorporates an on-site review, similar to an FSAP.

The ICPs were first issued in 1997 and a revised set of 26 principles was adopted in 2011 drawing on lessons learned from the financial crisis and from experience gained from FSAP assessments, as well as recommendations issued by the Group of Twenty (G-20) Finance Ministers and Central Bank of Governors of the Financial Stability Board. When adopting the new set of ICPs, the IAIS recognized the need to not only set international standards, but also promote their implementation among its member jurisdictions. The IAIS Implementation and Assessment Committee is charged with assessing and reviewing the implementation of the ICPs by IAIS members and to identify potential areas for improvement to ensure that the ICPs continue to represent a solid basis for insurance supervision.

Status: The IAIS has been in the process of updating the ICPs based on a thematic approach, with the latest update in November, 2018. Additionally, as part of integrating material for the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) with ICPs, revisions of ICPs related to ComFrame material will be submitted for adoption together with ComFrame at the 2019 IAIS Annual General Meeting.