Insurance Europe and its Reinsurance Advisory Board (RAB) have both similarly responded to a consultation conducted by the International Association of Insurance Supervisors (IAIS) on the Insurance Capital Standard (ICS) as a Prescribed Capital Requirement (PCR).
In the response, Insurance Europe supports the ICS project's initial objective to create a high-quality and robust global insurance standard that promotes a sound and level global regulatory playing field. However, it highlights that the initial objective has been put into question by the changing nature of the project.
Nonetheless, Insurance Europe particularly welcomed the inclusion of internal models in the candidate ICS and cautioned the IAIS against undermining them through the inclusion of output floors or inappropriate benchmarking. In addition, Insurance Europe made further points related to concerns over the technical specifications of the candidate ICS standard model and potential double reporting requirements, notably that the Margin Over Current Estimate (MOCE) parameter would create an unjustified and excessive prudential buffer.
Insurance Europe also commented on the jurisdictional implementation of the ICS and expressed its support for the existing European prudential frameworks (Solvency II, Solvency UK and the Swiss Solvency Test) to be the implementation of the ICS in Europe.