Global insurance industry encourages enhanced regulatory cooperation

TORONTO, Oct. 23 2008 – Fifteen associations representing the vast majority of the global insurance business, including North America, Europe, Asia, Australia and South Africa, presented a unified statement to the annual meeting of the International Association of Insurance Supervisors (IAIS) in Budapest, Hungary last week.

“Insurance associations around the world wanted to make a clear statement to regulators about the need for a common approach to the regulation of insurance companies. This is the first time that insurance associations have come together in such numbers to take a common position,” said Frank Swedlove, President of the Canadian Life and Health Insurance Association.

The statement highlights the fact that international insurance companies should be regulated with enhanced cooperation amongst supervisors using a group-wide approach to supervision. It also emphasizes the need to maintain the trend towards risk-sensitive regulation, and that the level of prudential regulation should reflect the insurer’s level of risk and diversification.

With respect to Canadian life and health insurers, the industry remains sound and well capitalized. This was reflected in remarks made by the federal Minister of Finance in his October 10 statement in response to the global financial turmoil. With assets of more than $430 billion in Canada, minimal exposure to distressed asset classes and a comparably more robust Canadian market than elsewhere in the world, Canada’s life and health insurers rank among the strongest financially both nationally and internationally, and are well positioned to meet their obligations to their policyholders despite the current market turmoil.

Established in 1894, the CLHIA is a voluntary association whose member companies account for 99 per cent of Canada’s life and health insurance business. The industry provides a wide range of financial security products such as life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to about 26 million Canadians.

Additional Resources: Canadian Life and Health Insurance Industry Fact Sheet (http://www.clhia.ca/download/Oct23_2008_Fact_Sheet.pdf)

See below for the international insurance associations’ Statement to the IAIS.

STATEMENT TO THE INTERNATIONAL ASSOCIATION OF INSURANCE SUPERVISORS

A stable insurance sector

16 October 2008 – At the annual meeting of the International Association of Insurance Supervisors (IAIS) the undersigned insurance associations discussed developments affecting the insurance industry across the world in the light of the current financial crisis.

Insurance associations around the globe agreed that overall the insurance industry entered the crisis in a strong position and has shown resilience to the continuing shocks to the financial system. This resilience seen to date reflects the strength of the insurance business model and the increasing attention paid by insurance regulators to fostering risk based supervision.

Key principles: Policyholder protection & enhanced risk based supervisory coordination

Looking ahead the global insurance industry believes that insurance regulation should therefore continue to be based on certain key principles. We believe that the maintenance and strengthening of these principles is the best basis for protecting policyholders on an ongoing basis.

  • The insurance industry shares the regulators’ objective of protecting policyholders.
  • International insurance companies should be regulated with enhanced cooperation amongst supervisors and group-wide supervision.
  • Supervisory authorities should strengthen their ability to cooperate in identifying emerging problems and in using their existing powers in an efficient and appropriate way to safeguard policyholders and beneficiaries.
  • The insurance industry encourages the continuing trend towards risk-sensitive regulation.
  • The level of prudential requirements should reflect the level of risk and diversification.
  • The insurance industry believes that regulation should encourage competition.

The insurance industry stands ready to work with the supervisory authorities to develop and foster these principles.

Endorsed by:

  • ACLI – American Council of Life Insurers
  • ABIR – Association of Bermuda Insurers & Reinsurers
  • ABI – Association of British Insurers
  • AIA – American Insurance Association
  • ASISA – Association of Savings & Investment of South Africa
  • CEA – European Insurance and Reinsurance Federation
  • CLHIA – Canadian Life & Health Insurance Association
  • DIMA – Dublin International Insurance & Management Association
  • GIAJ – General Insurance Association of Japan
  • ICA – Insurance Council of Australia
  • KLIA – Korea Life Insurance Association
  • PCI – Property Casualty Insurers Association of America
  • RAA – Reinsurance Association of America
  • SAIA – South African Insurance Association
  • VVN – Association of Dutch Insurers

About CLHIA

Established in 1894, the CLHIA is a voluntary association whose member companies account for 99 per cent of Canada’s life and health insurance business. The industry provides a wide range of financial security products such as life insurance, annuities (including RRSPs, RRIFs and pensions) and supplementary health insurance to about 24 million Canadians. It also holds more than $400 billion of assets in Canada and employs over 120,000 Canadians. www.clhia.ca.

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