International Solvency and Accounting (E) Working Group
September 30, 2007
Interim conference call and meeting minutes were adopted. The working group previously adopted comments via e-mail regarding the International Association of Insurance Supervisors (IAIS) Solvency Subcommittee’s enterprise risk management, internal models, and capital papers and regarding the submission of NAIC tentative positions on the International Accounting Standards Board (IASB) Phase II discussion paper to the IAIS Insurance Contracts Subcommittee.
Potential charges for the working group were discussed. The charges to be considered by E Committee for the working group seem appropriate.
A report was provided on the IAIS Insurance Contracts Subcommittee meetings in London, Basel, and Sydney. There are three main issues remaining in the IAIS Subcommittee’s response to the IASB Phase II Insurance Contracts Discussion Paper: recognition of bound but not incepted insurance contracts, policyholder behavior, and service margins. The U.S. will continue to work with the IAIS on their response, which should be finalized in November. Then, the working group will evaluate the IAIS Insurance Contracts Subcommittee’s response to the IASB to determine whether the U.S. positions are adequately represented in that document. If they are not, the working group plans to send a letter to the IASB directly that would support the IAIS document and offer any differing opinions or additional issues for consideration.
A report was provided on the IAIS Solvency Subcommittee meetings in London and Sydney. The IAIS Subcommittee sent four papers to the Technical Committee for potential adoption: guidance papers on enterprise risk management, internal models, and structure of capital requirements and a position paper on the valuation of technical provisions. The guidance papers are anticipated to form the basis for the standards to be developed next year. A plan for another guidance paper on capital resources was developed.
An update on Solvency II was provided. It was noted that core issues of a solvency system are yet to be developed in Solvency II and it may be premature to advance Solvency II outside of the EU until these types of details are decided, and perhaps even until the EU has some experience with the system to determine whether it will work in practice. The importance of continued and active participation in international IAIS work on solvency and accounting was emphasized.
Action items: