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).
- 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
- The main objectives of the ICS are protection of policyholders and to contribute to financial stability.
- One of the purposes of the ICS is the foundation for higher loss absorbency (HLA)2 for G-SIIs.
- The ICS reflects all material risks to which an IAIG is exposed.
- 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.
- The ICS promotes sound risk management by IAIGs and G-SIIs.
- The ICS promotes prudentially sound behavior while minimizing inappropriate procyclical behavior by supervisors and IAIGs.
- The ICS strikes an appropriate balance between risk sensitivity and simplicity.
- The ICS is transparent, particularly with regard to the disclosure of final results.
- The capital requirement in the ICS is based on appropriate target criteria, which underlie the calibration.
- 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. 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. ↩