At a working conference of the Group of Cross Border Insurance Supervisors held in Barbados on 31st May and 1st June 1997, insurance supervisors reached agreement on a statement of principles for applying fit and proper criteria to persons involved in insurance operations within their jurisdictions.
This is seen as a major step in ensuring consistency in the effective supervision of insurance operations by member jurisdictions. The Group is conscious of the danger that differing standards between Group members will result in supervisory arbitrage.
The statement of principles, which is annexed to this release, includes the following:
"The insurance supervisor should not look for evidence that the person at least meets a minimum standard but rather it should look for evidence that the person meets a high standard. This is because, in the context of the provision of financial services, the person concerned will almost invariably occupy a position of trust for the money, other assets or financial interests of customers and this must imply higher standards of conduct than in many walks of life.
The Group believes that the concept embraces not only honesty but solvency and competence."
To further ensure consistency of approach, the Group has established a Standards Committee which has been tasked to recommend standards to the Group on the insurance supervisory approach to the following topics:
- Solvency, including capital and asset considerations,
- Reinsurers and reinsurance security,
- Technical reserves, and
- The practical application of the "Fit and Proper Statement of Principles".
Following a review of the compliance of member jurisdictions with the membership criteria, the Group is now comprised of the following twelve jurisdictions: Anguilla, Bahamas, Barbados, British Virgin Islands, Cayman Islands, Gibraltar, Guernsey, Isle of Man, Jersey, Labuan, Netherlands Antilles and Turks & Caicos.
Labuan and the Cayman Islands have enjoyed Observer status of the Group since its formation. Cayman has, since that time, met all of the membership criteria other than that of the ability to exchange information with other supervisors. With the establishment of the new Monetary Authority that issue has been satisfactorily dealt with. The Group is pleased that Labuan took the decision to apply for full membership.
The Group has also resolved to look at the feasibility of establishing a jointly funded computer based reporting system and supervisory database available to all Members and Observers of the Group. This will help to raise and harmonise supervisory standards.
The Group also discussed money laundering, the supervision of investment related life
products and risk based capital and risk profile methods of solvency assessment.
For further information concerning this press release, please contact:
Steve Butterworth, Director of Insurance Guernsey Financial Services Commission Tel: 01481 712801