On January 25, the International Association of Insurance Supervisors (IAIS) issued a Draft Application Paper for public consultation on the Supervision of Control Functions. The Draft Application Paper describes practices aimed at helping supervisors address issues related to the supervision of control functions. In particular, the Draft Application Paper supports observance of ICP 8 (Risk Management and Control Functions), and is relevant to ICP 5 (Suitability of Persons) and ICP 7 (Corporate Governance).
After discussing responses to this consultation in a series of Insurance Working Group (IWG) calls, the IIF submitted its response to the IAIS on March 25, 2021. The IIF response agreed on the importance of ensuring the independence and stature of internal control functions, and expressed support for the IAIS’s work on developing a supervisory framework. The IIF encouraged the IAIS to take a more proportionate, risk-based, and outcomes-focused approach to the supervision of group-wide control functions, especially with respect to the supervision of intra-group outsourcing. Moreover, we urged the IAIS to guide supervisors to take a holistic view of the organization’s governance and risk management, and the outcomes of its control function activities, as opposed to relying on subjective criteria such as perceptions of the skills, experience, and stature of control function personnel.