By Kwon Hyouk-Se
Since the 2008 global financial crisis, reshaping the financial regulatory frameworks to ward off another crisis has been a priority for policy makers and financial regulators around the world.
Discussions on global regulatory reform initially started in the banking sector and resulted in a new set of capital, liquidity, and leverage rules collectively known as the Basel III framework.
There was also a broad consensus on the need for reform of other key components of the global financial system. For insurance, the International Association of Insurance Supervisors (IAIS), the global insurance standard-setting body representing insurance regulators and supervisors from more than 190 jurisdictions in some 140 countries, has been leading the charge to promote more effective and more globally consistent insurance supervision.
And the annual conference, which Korea hosts this year in Seoul, is where supervisors and the industry across countries come together to debate and take concrete measures for the goals we all share.
The theme of this year's conference is "Toward a New Horizon for Insurance Supervision: Cross-Sector and Cross-Border Harmonization and Cooperation."
It is a clear recognition of the need for more effective cross-border coordination and cooperation in reinforcing insurance supervision, improving harmonization across different financial sectors, and contributing to global financial stability.
With regards to the conference agenda, the IAIS has been working on several initiatives that will take more concrete shape or be finalized at this year's conference.
One is the adoption of newly revised Insurance Core Principles (ICPs) that have been in the works for the past three years or so to address new supervisory needs and to improve cross-border consistency in insurance supervision.
This year, 26 ICPs covering such key safe and soundness standards as capital adequacy, corporate governance, and risk management are expected to be discussed and approved.
It is also worth noting that the newly revised ICPs are to be considered for standards under the Financial Sector Assessment Program that the IMF and the World Bank jointly conduct around the world to identify problems early on and reduce the likelihood of a crisis in the financial markets.
Another key agenda item is ComFrame, short for Common Framework for Internationally Active Insurance Groups, which has been in the works since July 2010 with the goal of promoting more effective assessment and oversight of large insurance groups operating in many different markets.
Because of the absence of internationally harmonized capital rules for insurance firms, as is the case for banks under Basel III, there is the hope that ComFrame will pave the way for a strong cross-border harmonization in the supervision of insurance companies. Discussions are also set for SIFIs or systemically important financial institutions.
The IAIS annual conference is a gathering of not only insurance regulators but also international organizations and industry experts.
Korea's insurance supervisors are delighted to host such a key international meeting and welcome friends and colleagues from all over the world to Seoul for what promises to be a great conference for everyone.
Kwon Hyouk-se is governor of the Financial Supervisory Service. The Seoul-based financial supervisor co-hosts the IAIS together with the Financial Services Commission.