Insurance Core Principles

Last Updated 12/21/2017

The Insurance Core Principles (ICPs) developed by the International Association of Insurance Supervisors (IAIS) provide a globally accepted framework for the regulation and supervision of the insurance sector. The ICPs are an internationally developed set of principles, standards and guidance applicable to supervisors/regulators of insurance companies and fundamental to effective insurance supervision. They seek to foster convergence towards a globally consistent supervisory framework. The IAIS was established in 1994 to promote cooperation among insurance supervisors around the globe and with supervisors in other financial sectors. The IAIS represents insurance regulators and supervisors of more than 200 jurisdictions in nearly 140 countries.

The IAIS ICPs set out the fundamentals of effective insurance supervision. They serve as a basic benchmark for insurance supervisors in all jurisdictions and can be used when establishing a supervisory regime or for identifying areas in existing regimes that need to be improved. They apply to the supervision of insurers whether private or government-controlled insurers that compete with private enterprises, wherever their business is conducted, including through e-commerce.

The ICP material is presented in order that the hierarchy can be clearly understood. ICP statements, at the highest level in the hierarchy, prescribe the essential elements that must be present in a supervisory regime in order to promote a financially sound insurance sector. Standards set out key high level requirements that are fundamental to the implementation of ICPs. Standards must be met to demonstrate full observance with core principles. Guidance material, the lowest level in the hierarchy, elaborates on the meaning of a standard and provides examples of possible ways to comply with or implement an ICP statement or standard.

The ICPs are used in the evaluation of supervisory regimes under the Financial Sector Assessment Program (FSAP) conducted jointly by the World Bank and the International Monetary Fund (IMF). The FSAP is a comprehensive and in-depth analysis of a country's financial regulatory sector. The World Bank and the IMF rely on internationally recognized standards as a way to measure observance with accepted practices. For insurance, the ICPs form the basis for the assessment of insurance regulators' observance of international standards.

The ICPs were first issued in 1997 and have been revised several times, most recently in 2011 in the wake of the financial crisis. In October 2011, the IAIS adopted a new set of principles that take into account experience gained from FSAP assessments as well as recommendations issued by the Group of Twenty (G-20) Finance Ministers and Central Bank of Governors of the Financial Stability Board. When adopting the new set of ICPs, the IAIS recognized the need to not only set international standards, but also promote their implementation among its member jurisdictions. The Standards Observance Subcommittee was created to assess and review the implementation of the ICPs by IAIS members and to identify potential areas for improvement to ensure that the ICPs continue to represent a solid basis for insurance supervision globally.

The NAIC and U.S. state insurance regulators are heavily engaged with their international counterparts in developing the elements of a stronger international insurance regulatory framework. Each state, the District of Columbia, and five U.S. territories are members of the IAIS. The NAIC and state regulators are fully engaged in the important IAIS process that promotes the implementation of new standards, the revised ICPs along with corresponding standards and guidance material.

In March 2017, the IAIS launched a major consultation package covering proposed revisions to a number of ICPs and ComFrame (Common Framework for the Supervision of Internationally Active Insurance Groups)-related material, in addition to an Application Paper on Group Corporate Governance.. "This package is the product of substantial feedback from insurance supervisors and stakeholders from throughout the world," stated Victoria Saporta, Chair of the IAIS Executive Committee. Ms. Saporta added: "It represents a major milestone in finalizing the qualitative components of ComFrame in line with its scheduled delivery in late 2019, and in upgrading the ICPs.