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assessing typologies of different risks, asset liability modeling, investment analysis, exercising stress tests, market conduct, and common standards for the assessment of the fitness and propriety of the management and owners of financial institutions.


This assessment took place against a background of a strong macroeconomic

performance. As a result of expectations of good growth prospects and low inflation, interest rates have been falling over the last few years. As technical provisions for many older life policies with guaranteed capital were calculated assuming higher (less prudent)

discount rates the provision for these policies is insufficient. The insurance supervisory staff

are aware of this issue. Nonetheless it is recommended that the solvency requirements for these life insurance policies be enhanced.


Insurance fraud undermines the reputational standing of insurance markets and

leads to welfare losses because of suboptimal premiums. To avoid such a problem arising,

it is recommended that the association of insurers, the criminal police, and the NBS should cooperate more intensively.

Main findings


The internal and external auditors as well as actuaries currently play limited

roles in the supervisory framework. A consequence is that the duties and responsibilities of the insurance supervisor are relatively heavy compared to other jurisdictions. It is therefore recommended that the NBS start a process of rebalancing the necessary supervisory work of insurance companies in a way by defining and expanding what is expected from the external

auditor and actuary. One way to achieve this could be by establishing in legislation the statutory role of these professionals, including obligations and legal immunities, fit and proper criteria, code and conduct, and the NBS’ power to approve and remove these key functionaries.


The powers of the NBS to supervise the fitness and propriety of the owners of

insurance companies need to be strengthened. It is also recommended that the NBS strengthen supervision of tied agents by focusing on the market conduct of these intermediaries according to EU laws. With respect to consumers in their own jurisdiction, the

supervisory authority should set requirements with which insurers and intermediaries must comply. The requirements applicable to cross-border sales should also be clear.

Recommended Action Plan


The NBS is generally compliant with the ICPs but, in the opinion of the assessor,

the supervisory system would benefit from the additional measures listed below:

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