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Prudential Regulation and Risk Management
in Life Insurance (25 Feb - 3 Mar 2006)
Preparatory
Questions and Pre-Reading for Participants
1. Introduction
The purpose of this note is to provide some comments about work participants are expected to do prior to their arrival in Melbourne and the start of the Training Program. There are two elements to this:
- 1. Preparatory Work: For the Training Program you will be asked to provide input regarding issues etc from your perspective. We suggest some issue that maybe considered below. This information is requested to be provided prior to the commencement of the Training Program. In particular, it is requested that each country provides, in electronic format, the following by Wednesday 22 February 2006:
- Discussion and commentary on issues currently being faced, from the supervisory perspective in, that country
- Short Summary Presentation for Session 1.4
- 2. Pre-Reading: A number of documents are provided which will provide you with some background and useful information. It is expected that participants will have reviewed these documents prior to the start of the Training Program.
- Australian Regulatory Framework: In addition to this suite of Pre-Readings, a brief introduction to the Australian Regulatory Framework will be provided prior to the Training Program. This is to provide participants with some explanation of, and background to, the current Australian regulatory system. Experience has shown there is significant interest in the Australian Regulatory system from many participants as many features of the Australian system are unfamiliar to participants with the result that questions on the Australian regime are often asked. Provision of this background information should not be taken as a proposal that the Australian regime is proposed as being appropriate for other jurisdictions.
2. Preparatory Work – Review of Issues
This session will use information regarding the issues currently being faced in respective countries as provided by the participants representing each country.
Following are some suggestions as to the sort of issues that may be considered. Please note that the training program is focussed on investment and retirement products.
- What are the key areas of supervisory concern?
- As they apply to the industry
- As they apply to governance in the supervisory agency
- What are the major impediments in effecting changes to the supervisory agency structure, practice and administration?
- From the industry and the supervisory perspectives
- How should these be addressed?
- What current supervisory initiatives are underway and what the drivers of these initiatives are.
- Are there specific issue or concerns you would like to see addressed during the Training Program?
Note that we are not seeking to identify detailed country specific issues, rather to identify broader areas of common concern. Also, a review of the Pre-Readings, and Pre-reading 11 in particular, may stimulate some thoughts for you.
As noted above, we request your responses and comments to be provided, electronically, to the APEC Study Centre by Wednesday 22 February 2006.
3. Preparatory Work – Presentation for Session 1.4
As part of the first module of the Training Program, there is a session entitled:
1.4 Participant Presentations and Discussion: Group reviews of country specific issues and participant objectives
This session will be made up of several components:
- Country Presentations: A representative from each country will make a short presentation summarising the issues they have identified as facing their industry and supervisory environments. These presentations will be limited to 5 minutes and it is suggested that a few PowerPoint slides (3 or 4) are used. As noted above, we require any PowerPoint slides or materials to be used to be provided, electronically, to the APEC Study Centre by Wednesday 22 February
- Group Work: Participants will be placed in small groups and these groups will then meet to work together. The discussions will focus on reviewing the presentations and identifying common themes, issues and priorities.
- Discussion: On conclusion of the group work, results will be shared with the larger group and issues emerging considered in the context of the Training Program.
4. Pre-Readings
There are 11 readings, listed below, with brief comments as to why they may be relevant:
This paper, presented at the November 2000 Manila MRC Symposium, outlines an Asian Development Bank view of some of the issues in design and implementation of financial policy, regulation and institutional framework in the context of our structural adjustment program support to the life insurance and pensions sector. This draws on the ADB’s years of accumulated experience.
This paper provides one view of the basic tenets and rational for a financial services supervisory system.
- IAIS Cornerstones for the formulation of common regulatory financial requirements - October 2005
This gives a very high level overview of supervisory philosophy outlining a ‘three pillars’ approach. This work reflects the explicit influence of the Basel 2 accord in the banking areas. See www.iaisweb.org
The International Association of Insurance Supervisors (IAIS) has developed a high level set of Core Principles for the regulation of insurance industries. These have been utilised in many countries around the world.
These principles will be referred to during the Training Program.
The International Organisation of Pension Supervisors (IOPS) has recently approved its set of principles for the supervision of private pensions. This document also notes that principles of pension regulation have been provided by the OECD (2004 - ‘Core Principles of Occupational Pension Regulation’) and that these IOPS principles are drawn from and are compatible with OECD Core Principle 6 on Supervision. See www.iopsweb.org
These principles were endorsed by the senior regulators attending the November 2001 Beijing MRC Symposium. Note that they take a different focus when compared with the OECD Guidelines for Pension Fund Governance, OECD Secretariat, July 2002 (see www.oecd.org.)
This paper, presented at the MRC Symposium held in Singapore in November 2002, provides a more formal framework that allows regulators to encourage and evaluate progress in regulatory reform. It provides a set of criteria, both qualitative and quantitative, which should be a useful guide to regulators in enhancing their roles.
It is noted that the two Appendices referred to in this paper are not included due to space constraints. However, they may be accessed directly by reference to the following websites:
Over the last year or so a review of many aspects of the regulation of the Superannuation industry in Australia has been undertaken. This document is the APRA submission to this review and outlines some regulatory issues and concerns.
Note that some familiarity with these issues – in contrast to the their details in the Australian environment - will be valuable when some of the implementation issues resulting from the approval of many recommendation from this review are considered in the Training program.
This paper provides a justification, by the Chairman of APRA, of why a prudential regulator is vitally interested in the corporate governance of the institutions that it regulates.
This paper provides a discussion, by the Chairman of APRA, of the vital importance of corporate governance, to a higher level of than that required by usual corporations laws, to a prudential regulator. While presented in the context of a recent Asian Bankers Association Symposium, the discussion is equally relevant to the insurance and pensions sectors.
This work was undertaken in preparation for the November 2002 MRC Symposium. A review of this may provide food for thought’ for participants when they are developing their input to the Training Program in terms of country feedback and country presentations.
Jules Gribble
Academic Co-ordinator, MRC Program
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