Our team will be on the ground in Santiago, Chile for the International Association of Insurance Supervisors (IAIS) Annual Conference from November 10-11. This year’s theme is “Changing landscape: the role of the insurance sector in meeting emerging economic and social challenges.” The conference agenda includes a cyber risk-focused keynote speech from Matt Holland (Founder, CEO, and CTO of Field Effect), a town hall dialogue with IAIS Executive Committee (ExCo) members, as well as sessions on diversity, equity and inclusion (DEI), macroeconomic risks, climate risk and development of the Insurance Capital Standard (ICS). Registration is open through October 12.
Development of the ICS
Most of the action is expected at the tail end during the ICS panel “Countdown to the ICS: looking ahead to finalization of the global capital standard.” Although that panel closes out the conference, international supervisors will be in Santiago all week negotiating criteria to assess whether the Aggregation Method provides comparable outcomes to the ICS. The IAIS issued a public consultation to receive stakeholder feedback on the draft criteria this summer and intends to finalize the criteria in November, presumably during the Annual Conference. The ICS is currently viewed by the life insurance industry as inappropriate as a prescribed capital requirement for U.S. Internationally Active Insurance Groups due, in part, to its treatment of long-duration products. The Aggregation Method is believed to be more appropriate for the U.S. insurance market. Industry has suggested considerable changes to the draft criteria to achieve comparability.
The Holistic Framework
The IAIS also will discuss implementation of the Holistic Framework, how it’s contributing to the insurance industry’s resiliency and identifying emerging risks to financial stability. The Holistic Framework was adopted by the IAIS in 2019 as a framework for supervisors to monitor global financial stability through the assessment of systemic risk. The Holistic Framework includes monitoring of individual insurer and sector-wide activity through the Global Monitoring Exercise (GME). Panelists will address high inflation rates, market volatility, and findings from the GME. It’s possible that we’ll hear updates from the ExCo’s “collective discussion,” scheduled to take place this month, where ExCo members will discuss the GME data collection and identify themes.
Addressing climate-related risks is a priority for international policymakers and supervisors, and the IAIS is active in these discussions and efforts. The panel will focus on how supervisors intend to embed climate risk into insurers corporate governance and risk management frameworks. Panelists will also discuss potential protection gaps and solutions.
Diversity, Equity and Inclusion
The DEI discussions held at the IAIS Global Seminar in Croatia in June will continue in Chile. The session is expected to focus on how DEI in the insurance workforce contributes to better served consumers, governance, decision making and ability to prevent discriminatory practices. At the time of the Global Seminar, it was unclear how the IAIS would move forward in this area. We expect that the IAIS ExCo will complete multiple conversations on this topic before the Annual Conference, and at the NAIC Insurance Summit earlier this month there was mention of an IAIS DEI public statement coming out at the end of this year. We may get a better sense of the IAIS’s direction during this panel.