Global Corporate Insurance & Regulatory Bulletin - October 2013

Keywords: IAIS, global insurance capital standard, ASEAN 2015, EIOPA Solvency II Guidelines, NAIC List of Qualified Jurisdictions

GLOBAL

Global - IAIS Commits To Develop A Global Insurance Capital Standard By 2016

On 9 October 2013 the International Association of Insurance Supervisors (IAIS) announced its commitment to developing global insurance capital standards by 2016. It hopes the new rules will be ready for testing in 2017.

The rules will provide that insurance groups with an active international presence must adhere to a risk-based global insurance capital standard.

The new rules, which would represent the first time a standard has been rolled out globally will form part of the ComFrame which is the IAIS blueprint for supervising international insurers.

The IAIS is currently planning to develop the regime by 2016, carry out tests in the subsequent year and roll the regime out for a two year trial period before implementing it in 2019.

Industry think-tank The Geneva Association has pledged to help IAIS develop the new standards. However, it considers the current timescale to be too ambitious, citing the fact that development and implementation of global standards within the financial sector have taken many years to develop.

The IAIS press release can be found here.

ASIA

Hong Kong - From Self-Regulation To A Licensing Regime

The Hong Kong legislative consultation proposals to establish a new Independent Insurance Authority (IIA) have been described by the government as the most significant reform initiative for the Hong Kong insurance sector since 1983. The proposals, if enacted, will effectively re-write insurance law in Hong Kong, including the following key concepts:

Creation of the IIA - The IIA will replace the existing Office of the Commissioner of Insurance (OCI) and will be vested with wide regulatory powers, not unlike those of local financial regulators such as the Securities and Futures Commission (SFC) and the Mandatory Provident Fund Schemes Authority (MPFA). The IIA's powers will include inspecting, investigating, and imposing disciplinary sanctions on insurers in the event of misconduct. A registered licensing regime - The regulatory role of the IIA will apply to any person carrying out "regulated activities" involving insurance, and any such person will (subject to certain exceptions) need to be licensed. Regulated activities are proposed to include negotiating, arranging, inviting or inducing a person to enter into an insurance contract, as well as settling or making an insurance claim, or changing the terms of an insurance contract. The Government plans to finalise a bill to amend the Insurance Companies Ordinance (Cap. 41 of the laws of Hong Kong) by the end of 2013, with the aim of introducing the new regime in 2015.

It is clear that the new regime will have significant implications for insurers and the insurance industry in Hong Kong. We will provide additional commentary as the legislative process proceeds.

Philippines - Reform Increases Insurance Capital Requirements In Preparation For Asean 2015

The Philippines has made amendments to the country's Insurance Code to provide for increased capital requirements.

The changes provide that the total of the paid-up capital, retained earnings, unimpaired surplus and revalued assets must meet the following minimum levels:

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