(本文翻譯自 陳冲 燕瘦強穿環肥衣的ICS 2022-08-30)
If someone, obviously a slender figure, tries on clothes in a clothing store but insists on trying oversized ones, seen like a Chaplin stage photo, tumbling and unsteady, I believe that no one would think he/she well-mannered.
Recently, two capable gentlemen announced to compete for the chairman of the Life Insurance Association and expressed their potential agenda in the media coincidentally, talking about the issue of adopting ICS in 2026. It can be easily seen that it’s an issue that the industry is concerned about now and professional media from time to time mentioned it. ICS is the product of IAIA. So, what is ICS and what kind of association IAIS is?
IAIS is the abbreviation of the International Association of Insurance Supervisors which was established in 1994. In the 1995 St. Louis meeting, the IAIS organized the executive committee and it was a great pleasure for me to be elected as the first executive director of Asia area and the only one from Taiwan for the past 27 years. For this reason, I have a passing acquaintance with IAIS. The establishment of IAIS is to imitate the NAIC (an US 151-years-old association whose goal was to reconcile the different insurance laws and regulations of 51 states). Global insurance supervisory authorities join IAIS voluntarily. It aims to formulate insurance industry standards, and hopes to create a fair and safe insurance market and protect the rights and interests of the insured. The ideal is lofty but the problem is how to take into account the conditions of various countries and the situation of insurance companies of different sizes around the world, just like a one-size-fits-all set. It’s naturally not easy.
Among the international financial supervision organizations, IAIS is considered a junior one compared to veteran ones such as Basel Committee and IOSCO. At the 2019 Abu Dhabi annual conference, the IAIS agreed ICS(Insurance Capital Standard) Version 2.0, hoping to improve the ability to bear risks through capital adequacy and relevant information indicates that it’s a standard for IAIGs. What are IAIGs? Literally, Internationally Active Insurance Groups refers to insurance companies active in the international insurance market. Just like the Internationally Active Banks defined by the Basel Committee that must be those that have great impact on international systemic risks. In the process, although IAIS intends to set a benchmark, it however understands that each woman is attractive in her own way while some was plump and some was skinny that single standard doesn’t fit all, so the ICS is set to target only heavyweight industry companies. It doesn’t intend to catch all in one net unselectively.
Based on this concept, there are two criteria for IAIGs to interpret “internationally active”. One is that an IAIG’s premiums are written in three or more jurisdictions and gross written premiums outside of the home jurisdiction are at least 10% of the group’s total gross written premiums. The second is that an IAIG’s total assets are at least USD 50 billion or total gross written premiums are at least USD 10 billion. It seems that there is no insurance company in Taiwan qualified for the above two criteria. Our insurance penetration rate has long been the highest in the world. in the short term, there should be no IAIG in the country.
Well, our ambitions don’t lag behind. Half a year after the ICS was released, on Jul 7th 2020, the competent authority held a meeting and invited the representatives of the domestic insurance industry. Perhaps out of kindness, or perhaps courage, it’s said that all expressed their support for the introduction of ICS and would cooperate with the competent authority with the three-phase promotion (2020-2025) which is divided into local trial period, parallel trial period and adoption preparation period. On Sep. 25th 2020 at an ICS seminar, I was invited to give an opening speech. I said that I take it with a grain of salt regarding the adoption of ICS into Taiwan especially after the local trial period. Afterwards, many insurers expressed unease privately, and it’s no wonder that the candidates for the chairman of the Life Insurance Association have included ICS in their policy.
Two years passed. It’s difficult to get off after riding a tiger. Everyone has his own charm. Why insists on wearing same clothing? Well, we hadn’t lost the battle yet. Maybe we can consider setting a local version of the IAIG standard, which take into account not only the global trend, but also local conditions. There are many precedents before. Don’t laugh me as hypocrite.
(Released on the United Daily News, Aug 30th 2022)