IIF Response to IAIS Draft Issues Paper on Insurer Culture

On June 23, the International Association of Insurance Supervisors (IAIS) issued a Draft Issues Paper on Insurer Culture exploring the concept of insurer culture as a point of intersection for prudential and conduct risks. The IAIS Draft Paper draws attention to issues relating to conduct and culture, which are of increasing importance to both conduct and prudential supervisors, particularly in light of rapidly changing financial markets driven by innovation, shifts in consumer expectations, and broader societal challenges.  

Following a series of discussions with the Insurance Working Group (IWG), the IIF responded to the Insurer Culture consultation on August 13. The IIF response welcomed the important link between insurance conduct risks and the financial soundness of the industry, and the need for prompt and effective supervisory action, particularly when an insurer fails to prevent or address market misconduct or the unfair treatment of customers. However, the IIF response also emphasized that a wide range of cultures can be aligned with good customer outcomes and treating customers fairly and, therefore, a one-size-fits-all approach cannot capture unique features of an organization. In that vein, we encouraged the IAIS to adopt an outcomes-focused and evidence-based approach to the supervision of culture, noting that the dimensions of culture vary internationally, across industries, and even within global companies. The IIF highlighted the need for the IAIS to engage in an open discussion with a wide range of stakeholders in order to further explore issues of insurer culture and best practices for the supervision of insurer culture. The IIF would be happy to facilitate such a dialogue in future discussions between the IAIS and industry stakeholders on this important topic.