The global financial crisis marked a significant change in the focus of financial-sector regulation. For the largest insurers, regulation has expanded beyond pure policyholder protection and, by extension, the solvency of individual companies, to promoting and protecting global financial stability. Regulators are also examining potential future risks in addition to historic risks or performance issues, with one supervisor noting, “I challenge the aphorism that ‘if it is not broken, don’t fix it.’ We hear that all the time. You need
to start early. You need time to work things out. When did Solvency II start? I am thankful it started early.”
To enhance stability, supervisors need a truly global view of firms’ activities. This demands much greater coordination within the insurance group, as well as by the dozens of supervisors that oversee the various parts of the largest insurers. Since the creation of the Insurance Governance Leadership Network (IGLN) in 2012, participants have expressed a sustained interest in the challenges and opportunities presented by the new focus on group supervision.
On October 23 in London and November 14 in New York, IGLN participants convened to discuss the future of group supervision and the new regulatory developments that both require and encourage better group supervision. Industry awareness of such developments as ComFrame, 2 global capital standards, recovery and resolution planning, and macroprudential supervision is uneven. One director noted, “We have a new risk on the risk list – ComFrame.” Others indicated their firms are aware of the debate over standards, but are unsure of the impact the new standards will have on them.
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