Insurance Capital Standard Principles


The Insurance Capital Standard (ICS) is being developed through a multiyear process of field-testing and public consultation. It is guided by the following 10 principles published by the International Association of Insurance Supervisors (IAIS).

  1. The ICS is a consolidated groupwide standard with a globally comparable risk-based measure of capital adequacy for internationally active insurance groups (IAIGs) and global systemically important insurers (G-SIIs).1
  2. The main objectives of the ICS are protection of policyholders and to contribute to financial stability.
  3. One of the purposes of the ICS is the foundation for higher loss absorbency (HLA)2 for G-SIIs.
  4. The ICS reflects all material risks to which an IAIG is exposed.
  5. The ICS aims at comparability of outcomes across jurisdictions and therefore provides increased mutual understanding and greater confidence in cross-border analysis of IAIGs among groupwide and host supervisors.
  6. The ICS promotes sound risk management by IAIGs and G-SIIs.
  7. The ICS promotes prudentially sound behavior while minimizing inappropriate procyclical behavior by supervisors and IAIGs.
  8. The ICS strikes an appropriate balance between risk sensitivity and simplicity.
  9. The ICS is transparent, particularly with regard to the disclosure of final results.
  10. The capital requirement in the ICS is based on appropriate target criteria, which underlie the calibration.

Return to Tailoring Global Capital Standards

References:

  1. 1. Global systemically important insurers (G-SIIs) are designated annually by the G20’s Financial Stability Board (FSB) based on a recommendation by the IAIS. Currently there are nine G-SIIs: Aegon N.V., Allianz SE, American International Group (AIG), Aviva plc, Axa S.A., MetLife, Ping An Insurance (Group) Company of China, Prudential Financial and Prudential plc.
  2. 2. Higher loss absorbency (HLA), one of the FSB policy measures for systemically important financial institutions, represents additional capital requirements for G-SIIs, reflecting their systemic importance in the global financial system.