On Dec. 5, IAIS adopted insurance capital standard (ICS).
IAIS adopts first comprehensive global capital standard for insurance supervision, the Insurance Capital Standard (ICS), providing a risk-based measure of capital adequacy for internationally active insurance groups (IAIGs).
Also adopted important updates to existing qualitative global standards for insurance supervision, the Insurance Core Principles and ComFrame, which are applicable to the supervision of the insurance sector as a whole, and of IAIGs, respectively.
The updates relate to climate risk, recovery and resolution, and valuation and capital adequacy; the adoption of these standards underscores IAIS’ ongoing efforts to promote a resilient insurance sector and contribute to global financial stability.
Insurance Capital Standard
Provides globally comparable risk-based measure of capital adequacy for IAIGs and forms quantitative element of ComFrame; serves as a group-wide prescribed capital requirement, which is a solvency control level below which supervisors will intervene on group capital adequacy grounds.
Specifics of ICS have been adopted in Level 1 text setting out overarching principles and concepts of the ICS, and the Level 2 text providing detailed specifications.
IAIS published additional supporting documents: ICS calibration document provides explanations on the calculation of the different ICS risk charges and their aggregation.
Detailed information is available for all risk modules within insurance, market, credit and operational risks, also for correlation matrices used for aggregating risk charges.
ICS economic impact assessment report provides a qualitative evaluation of potential effects of ICS implementation across jurisdictions, which informed the finalisation of the ICS. It considers potential impacts on insurance products, investment policies, capital and business models.
In 2025, IAIS will begin developing a detailed ICS assessment methodology.
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.
In 2027, IAIS will initiate detailed jurisdictional assessments of ICS implementation.
Updates
Also finalised a targeted update of its ICPs and certain related standards in ComFrame.
ICPs form the globally accepted framework for supervision of the insurance sector and consist of principal statements, standards and guidance.
ComFrame builds upon the ICPs and establishes supervisory standards and guidance specifically focused on the effective group-wide supervision of IAIGs.
Following a comprehensive update of these global standards in 2019, the current, more targeted update aims to ensure that the ICPs remain relevant and effective in addressing emerging risks and challenges faced by the insurance sector today.
Effectiveness
IAIS members are committed to implementing the updated ICP and ComFrame standards from 2025.
