{"id":49958,"date":"2019-11-14T21:39:00","date_gmt":"2019-11-15T02:39:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=49958"},"modified":"2025-09-03T21:40:52","modified_gmt":"2025-09-04T01:40:52","slug":"iais-says-no-to-deemedretractions","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=49958","title":{"rendered":"IAIS Says No To DeemedRetractions"},"content":{"rendered":"

The International Association of Insurance Supervisors has released<\/a> a bevy of documents related to the supervision of Internationally Active Insurance Groups.<\/p>\n

Of these, the most important for our purposes is the “Technical Note on ICS Version 2.0 for the monitoring period” which states:<\/p>\n

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Principal Loss Absorbency Mechanism (PLAM):<\/b> A distinction is made for mutual and non-mutual IAIGs. For non-mutual IAIGs, the 10% limit for Tier 1 Limited financial instruments will be maintained for Tier 1 Limited financial instruments that do not have a PLAM. An additional 5% allowance is granted to those Tier 1 Limited financial instruments that do have a PLAM. The limits are stated as a % of the ICS capital requirement.<\/p>\n

For mutual IAIGs: A PLAM is not required as part of Tier 1 Limited capital resources and the limit for Tier 1 Limited capital resources is maintained at 30% of the ICS capital requirement<\/p>\n<\/blockquote>\n

So that’s an end to the saga that began in February, 2011<\/a>. As an investor, I’m shocked; as a taxpayer who will end up footing the bill if one of our outsized insurance companies goes down, I’m disappointed.<\/p>\n

Update<\/b>: An end? Or a new beginning<\/a>? The Canadian Office of the Superintendent of Financial Institutions – which has disgraced itself throughout the negotiations for ICS 2.0 – has announced:<\/p>\n

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While broadly supportive of the goals of the Insurance Capital Standard (ICS), the Office of the Superintendent of Financial Institutions (OSFI) did not support the ICS design proposed for a five-year monitoring period at the Executive Committee Meeting of the International Association of Insurance Supervisors (IAIS) in Abu Dhabi, United Arab Emirates.<\/p>\n

OSFI’s view is that that the Standard in its current form is not fit for purpose for the Canadian market. Specifically, the proposed capital requirements for long-term products are too high to be compatible with OSFI’s mandate of allowing Canadian insurers to compete and take reasonable risks.<\/p>\n

During the five-year monitoring period, OSFI will continue its work in trying to achieve an international capital standard for insurance companies that works for all jurisdictions.<\/p>\n

Quick Facts<\/p>\n