Comments on Draft ComFrame Due to the International Association of Insurance Supervisors by August 31, 2012

 

Public comments on a working draft of the Common Framework for the Supervision of Internationally Active Insurance Groups (“ComFrame”) are due to the International Association of Insurance Supervisors (“IAIS”) by August 31, 2012.  To access the draft, a list of frequently asked questions and other supporting documents, click here.

Comments must be received through the IAIS’ comment tool, which is available by clicking here.

The draft reflects the work performed during the first two years of building ComFrame and includes responses to comments received on the initial ComFrame Concept Paper first released on July 1, 2011.

World insurance markets have become increasingly interconnected.  Because this trend is likely to continue, the IAIS began developing ComFrame in July 2010 in response to increasing globalization in the insurance sector, combined with key lessons learned from the recent financial crisis.  The IAIS is the international standard-setting body for the prudential supervision of the insurance industry.

ComFrame is a major project of the IAIS.  While the ultimate role of ComFrame remains under discussion and development, the intent is given by its name–a common framework laying out how supervisors around the globe can work together to supervise internationally active insurance groups (“IAIGs”) and close regulatory gaps.  IAIGs are the largest, most complex insurance entities.

ComFrame has three main objectives:

1) Developing methods of operating group-wide supervision of IAIGs

2) Establishing a comprehensive framework for supervisors to address group-wide activities and risks

3) Fostering global convergence

The National Association of Insurance Commissioners’ (“NAIC’s”) international involvement has been increasingly focused on strengthening the supervision of IAIGs that operate in multiple countries.  The NAIC and state regulators are active in the development of the IAIS ComFrame project. NAIC President and Florida Insurance Commissioner Kevin McCarty is a member of the ComFrame Oversight Group.  In addition, the NAIC’s International Insurance Relations Committee supports the work of the IAIS by participating in Executive, Technical and other relevant Committee meetings, and by drafting and commenting on papers to represent the views of U.S. insurance regulators.

According to the NAIC, ComFrame is neither intended to be a forum to create prescriptive ways to promote a particular means for solvency standards, nor to create additional layers of regulation.  Rather, it is expected to evolve over a three-year period, with the Development Phase to be completed by the end of 2013.  The IAIS will issue a comprehensive report detailing the end of the Development Phase, following which there will be one or more impact assessments of both qualitative and quantitative requirements for IAIGs.

The IAIS’ first exposure draft of the Concept Paper on ComFrame comprised five primary work streams called “Modules,” each of which was further broken down into elements prioritized for purposes of development and exposure.

The 2011 modules were:

• Scope of Application
• Structure and business from a risk management perspective
• Qualitative and Quantitative Requirements
• Supervisory process
• Jurisdictional Matters

Since the Concept Paper was released, there has been much progress made on the development of ComFrame.  In March 2012, a new structure for ComFrame was proposed and subsequently approved by the IAIS Technical Committee.  The structure consists of the following four Modules (replacing the aforementioned five Modules of the previous structure):  

(1) The Scope of ComFrame which includes the criteria and process for the identification of IAIGs by supervisors, the breadth of supervision of IAIGs (which legal entities are included) and the identification of the group-wide supervisor

(2) The IAIG contains the requirements that an IAIG will need to meet

(3) The Supervisors covers the process of supervision, highlighting the role of the group-wide supervisor and other relevant supervisors’ responsibilities within the process

(4) Implementation of ComFrame sets out the jurisdictional requirements to implement ComFrame.

For a detailed overview of ComFrame, click here.

 

 

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