On March 9, 2009, the International Association of Insurance Supervisors (“IAIS”) released an Issues Paper on Group-Wide Solvency Assessment and Supervision (the “Issues Paper”). The purpose of the Issues Paper is to serve as a framework for the development of future papers providing guidance on group-wide solvency assessment and supervision on a global scale. The IAIS is comprised of regulators from approximately 140 countries, as well as industry professionals, and constitutes “97% of the world’s insurance premiums” according to the IAIS’s website.
The Issues Paper discusses the general challenges of group-wide solvency assessment and supervision, including: (1) intra-group transactions; (2) fungibility and transferability of assets within a group; (3) complexity of group structures; (4) diversity of legal and regulatory frameworks and regulatory arbitrage; and (5) measurement and aggregation of risks. The Issues Paper also looks at various approaches to group-wide solvency assessment and supervision, and compares the regulatory approaches of Australia, Canada, Japan, the European Union (under Solvency I and Solvency II), Switzerland and the United States (with respect to the NAIC).