Public consultation on draft criteria that will be used to assess whether the Aggregation Method provides comparable outcomes to the Insurance Capital Standard
Comments due by 15 August 2022 midnight CEST
In November 2017, the IAIS set out an agreement on the implementation of Insurance Capital Standard (ICS) Version 2.0, including a unified path to convergence of group capital standards in furtherance of its ultimate goal of a single ICS that achieves comparable outcomes across jurisdictions. The agreement acknowledges the development by the United States of the Aggregation Method (AM) to a group capital calculation. While the AM is not part of the ICS, the IAIS aims to be in a position by the end of the monitoring period to assess whether the AM provides comparable (ie substantially the same (in the sense of the ultimate goal)) outcomes to the ICS. If so, it will be considered an outcome-equivalent approach for implementation of ICS as a prescribed capital requirement (PCR). At the same time, the IAIS agreed to help collect data from the US and interested jurisdictions that will aid in the development of the AM.
In November 2019, the IAIS agreed on a process and timeline for developing criteria to assess whether the AM provides comparable outcomes to the ICS. Following public consultation in November 2020, the IAIS agreed on the definition of comparable outcomes and high-level principles (HLPs) in March 2021 to inform the criteria that will be used to assess whether the AM provides comparable outcomes to the ICS.
The IAIS began developing the draft comparability criteria in April 2021. Detailed criteria have been developed for each HLP and are the subject of this consultation. The draft criteria have been developed in such a way that the AM is neither precluded at the outset as an outcome equivalent approach to the ICS for measuring group capital, nor given a free pass. Stakeholders are thus invited to provide feedback on whether each individual criterion is clear, adequate, sufficient or too restrictive, considering the HLP to which it relates.
The consultation provides the opportunity for obtaining perspectives and technical input on various parameters included in the criteria, in the form of targeted questions to support this work. In particular, the IAIS seeks input to aid in the development of specific scenarios for the sensitivity analysis envisaged in the draft criteria for HLP 1. The IAIS is also seeking feedback on considerations for determining representativeness of the non-life insurance sample. Following consideration of comments on the draft criteria, the IAIS will finalise the criteria that will be used to assess whether the AM provides comparable outcomes to the ICS. This assessment is scheduled to begin in Q3 2023.
Feedback is invited by 15 August 2022 24.00 CEST (Basel time). All questions are optional so stakeholders may comment only on a subset of questions. After this deadline, the Consultation Tool will be closed and it will no longer be possible to submit any further comments.
How to provide feedback:
Please use the Consultation Tool available at this link. Instructions for use are available when you access the Tool. Please note that only comments submitted through the Tool will be considered. All comments will be published on the IAIS website unless an option in the Tool to keep comments confidential is chosen.
Please note that some formatting (eg bullet points) may not be preserved when copying and pasting your comments into the Consultation Tool from other software such as Microsoft Word.