Guernsey Ponders New Insurance Solvency Framework
by Jason Gorringe, Lowtax.net, London
12 September, 2017
Guernsey's financial services regulator, the Guernsey Financial Services Commission, has released a discussion paper on the future of the island's insurance solvency framework.
The paper describes the evolution of global and European insurance capital standards and discusses the future for Guernsey's regulatory framework in that context. It considers the International Association of Insurance Supervisors's (IAIS) International Capital Standards project which may, in due course, create a global standard for insurance capital similar to that created by the Basel Committee on Banking Supervision for internationally active banks.
It also reflects on the growing importance of the European Union's Solvency II regime, which has, since its implementation within the European Union in January 2016, created something of an international benchmark for capital adequacy in insurance, not least due to its equivalence regime.
The paper proposes three high-level options for the evolution of Guernsey's solvency framework: apply for Solvency II equivalence, continue to follow the core insurance principles laid down by the IAIS, or wait and then adopt the IAIS insurance capital standard, which is currently being developed.
The Commission says these options are not mutually exclusive since all three follow the same high-level principles and attempt to achieve similar outcomes in consumer protection and financial stability. The Commission also says the paper should not be taken to reflect any predisposition to follow any particular framework, acknowledging that the issues around Solvency II equivalence, in particular, are complicated.
Interested parties are encouraged to give their views on the discussion paper by no later than October 20, 2017.
See all of today's news