Insurance Core Principles - Executive Summary

FSI Executive Summaries  | 
30 November 2021
PDF full text
 |  4 pages

The Insurance Core Principles (ICPs) provide a globally accepted framework of principles, standards and guidance for the regulation and supervision of the insurance sector. They were developed by the International Association of Insurance Supervisors (IAIS) and apply to its member jurisdictions regardless of the level of development and sophistication of their insurance markets and the type of insurance products or services supervised. Initially adopted in 2011 and amended four times (the most recent amendments coming in 2019) the ICPs contain 24 principles.1

Insurance supervisors use the ICPs as a benchmark to assess the quality of their regulatory and supervisory frameworks and to help inform future work priorities. They are also used by the International Monetary Fund and the World Bank as part of their Financial Sector Assessment Program to evaluate the effectiveness of countries' systems of insurance supervision. This Executive Summary outlines the preconditions needed for effective supervision, and the structure and scope of the ICPs that are deemed essential to support a sound supervisory system.

Preconditions for effective insurance supervision

The ICPs identify five preconditions that can have a bearing on the conduct of supervision. While these preconditions are generally outside the control of supervisory authorities, supervisors should work with the government and applicable organisations to address any identified concerns.

ICP structure and scope

Each ICP consists of a Principle Statement, Standards and Guidance. The following diagram shows the ICP hierarchy:

The ICPs cover five key areas of insurance supervision.

1. Supervisory powers, responsibilities and independence

3. Qualitative requirements: governance and risk management

4. Quantitative requirements: capital and valuation

5. Market conduct issues and supervision of insurance intermediaries

1   Even though the numbering of the ICPs ends at ICP 25, there are currently 24 principles. This is because the former ICP 11 Enforcement was merged with ICP 10 – Preventive and Corrective Measures and Sanctions, and to avoid confusion, the IAIS decided not to change the existing numbering of the other ICPs.

This Executive Summary and related tutorials are also available in FSI Connect, the online learning tool of the Bank for International Settlements.