Summary of Webinar with Nicholas Herbert-Young, Senior Relationship Manager to the International Association of Insurance Supervisors (IAIS), on International Regulatory Trends & the Work of the International Association of Insurance Supervisors (IAIS).
CAFII held a webinar on 27 April, 2023 with Nicholas Herbert-Young, who is a member of the UK Financial Conduct Authority’s International Department, where he has a focus on global institutions, and where, as part of his FCA responsibilities, he is also Senior Relationship Manager to the International Association of Insurance Supervisors (IAIS). Mr. Herbert-Young was recommended as a webinar speaker by FSRA CEO Mark White, who is the Chair of the Market Conduct Committee of the IAIS, which Committee Mr. Herbert-Young sits on.
Mr. Herbert-Young said that the UK Financial Conduct Authority is one of two regulators in the UK, with a focus on market conduct. Mr. Herbert-Young’s role is to ensure that the FCA is properly represented at the IAIS and engages on the issues where it can add value. The IAIS exists to ensure that supervision creates fair and safe outcomes for consumers, along with a focus on financial stability. The key focus for the FCA on the IAIS is the Market Conduct Committee, which Mark White chairs and which the AMF also has representation on. The IAIS produces issues papers on matters of interest.
IAIS has over 200 jurisdictions which represents 90% of the world’s premiums. Other international organizations are also involved in it, such as the National Association of Insurance Commissioners. The IAIS sets up layers of principles, standards, and guidance which are agreed between the members. There are also systems of review so that members can be assessed. It does not have enforcement capabilities, but review exercises are very important and impactful. Insurance Core Principles including ISP19 on the conduct of business are also fundamentally important.
The IAIS has 35 staff members supporting its activities, and there is a paid Executive Director. There is an agreed five-year plan with stated objectives, and the organization has become more worldwide as opposed to being driven by developed countries only. Funding comes from the members and is based on premium income for the jurisdictions they represent. A variety of committees provide input on specific issues. The head office is located in Basil, Switzerland but meetings are held in different locations, and virtual meetings are now much more common. There is also an Annual General Meeting each year in November, which is hosted by a member. The Market Conduct Working Group has over 30 members.
Nicholas Herbert-Young said that the main contributors to the market conduct work of the IAIS have been the AMF, and more recently FSRA. Key regulatory trends of the IAIS in the market conduct area has been on culture and diversity, equity, and inclusion (DEI). The work on culture has been done with the Governance Working Group, and has led to some working papers. The DEI work has focused on vulnerable populations and their treatment by insurers.
Keith Martin noted the importance to CAFII members of principles-based regulation, and Nicholas Herbert-Young said the IAIS seeks to accommodate that approach. The IAIS is based on standards and does not take a prescriptive approach, but members may have their own approach. Mr. Herbert-Young noted that often those who request a principles-based approach follow up with a request for more clarity and detail, which is he said completely understandable.
The IAIS is also exploring vulnerable populations and financial resilience, with some of this work being explored by the DEI Working Group. In terms of the challenges caused by COVID-19, the FCA pivoted very quickly to a virtual model. There was also discussion of the mortality and health impacts of climate change, and the resultant impact on the life and health insurance sector. This is something that the IAIS is turning more attention to. The IAIS has a fintech forum and is also monitoring the impact of technology developments on insurance and insurance regulation. Another topic was operational resilience, which the IAIS has a Task Force on. Firms need to be able to serve their customers properly, and to overcome financial crises.
Among the big issues that need to be tackled were the cost of living crisis and the impact it has on vulnerable populations. Management of risk was another broad bucket that was critical, including in the context of global warming. International cooperation was another critical requirement going forward.
In addition to CAFII members, there were attendees from the Canadian Life and Health Insurance Association, or CLHIA; the Travel Health Insurance Association, or THIA; and from insurance and financial services regulators and policy-makers from across Canada, including the following:
- The Financial and Consumer Services Commission of New Brunswick, or FCNB;
- Quebec’s Autorité des marches financiers, or AMF;
- The Financial Services Regulatory Authority of Ontario, or FSRA;
- The Insurance Councils of Saskatchewan, or ICS;
- The Alberta Insurance Council, or AIC;
- The Government of Alberta;
- Alberta Treasury Board and Finance, or ATBF;
- the Financial and Consumer Affairs Authority of Saskatchewan, or FCAA;
- the Government of British Columbia;
- the Insurance Council of British Columbia;
- the British Columbia Financial Services Authority, or BCFSA; and
- the Government of Nova Scotia.
The IAIS Website can be accessed here: https://www.iaisweb.org/
Links to Relevant Resources:
Sustainable Insurance Forum: