AAA to IAIS

  • 2015 0206 - AAA to IAIS - RE: Risk-based Global Insurance Capital Standard Public Consultation Document (Dec. 17, 2014), , American Academy of Actuaries - 20p
  • 2015 0501 - AAA to IAIS - Committee Comments To IAIS On Conduct Of Business Risk Draft Paper, American Academy of Actuaries - 4p
    • (p3) - ...customers may be satisfied with companies because they provide inexpensive products, but the customers may be misinformed about what is being sold. 
  • 2016 1019 - AAA to IAIS - Academy ICS Counsultation Comment Letter,, American Academy of Actuaries - 12p
  • 2018 0213 - AAA to IAIS -  Re: Interim Consultation Paper on Activities-Based Approach (ABA) to Systemic Risk, American Academy of Actuaries - 2p
    • In particular, with respect to liquidity risk, the ability of an insurer or group to access capital and liquidity in a stress scenario is fundamental in solvency regulation.
  • 2020 - AAA to IAIS, 
  • 5. In your view, how can governance and culture of insurers and insurance intermediaries be influenced to better take into account conduct of business risks?
    • (example/health)  ...customers may be satisfied with companies because they provide inexpensive products, but the customers may be misinformed about what is being sold. (p3)
  • 7. Section 5 of the paper discusses the role supervisors can play in providing guidance relating to conduct of business risk. Could you suggest any examples of particular matters on which supervisory guidance could be useful?
    • The IAIS may want to consider providing additional details to the third bullet of paragraph 141 on page 29 on ways the supervisor could enhance customer awareness as a means of mitigating conduct of business risk.
    • We would suggest that such information could include a straightforward, detailed comparison of the purpose, potential pros and cons, and a means of comparing the value of significant insurance products, etc. (p4)

2015 0501 - AAA to IAIS - Committee Comments To IAIS On Conduct Of Business Risk Draft Paper, American Academy of Actuaries - 4p

  • AAA - (p2) - A good ORSA would incorporate conduct of business risks.
  • (p3) - Generally, U.S. insurers address the conduct of business risks through operational risk. The identification and management of operational risk (and the different types of operational risk) frequently is performed in conjunction with an insurer's internal audit function.  
  • In addition, some insurers consider such risks as part of strategic or reputational risk, which may be separately identified in the taxonomy.
    • Companies often provide qualitative assessments for the fraudulent or poor behavior of employees, intermediaries, or third parties.
    •  (p3) - This is an important component of conduct of business risk, and we would suggest that the IAIS provide a more detailed discussion on this issue within the paper.
    •  (p3) - However, this may not be easy to accomplish under current practices, as executives could face disincentives or opposition to prioritizing risk management within a company. 
  • Customer satisfaction is often a result of factors beyond an executive’s control.
    • For example, customers favor a health insurer that provides generous payouts for claims or an automobile insurer that does not raise rates, but those practices could be unsustainable and may render the company insolvent.
    • On the other hand, customers may be satisfied with companies because they provide inexpensive products, but the customers may be misinformed about what is being sold.
  • Q - 6. We would like to include more examples from IAIS member jurisdictions to illustrate the various points made in the paper.
    • Could you suggest practical examples illustrating the messages in the paper originating from your jurisdiction?
  • AAA - Another example is sales practices.
    • There are regulatory protections regarding the suitability of products for those insured, appropriate consumer disclosures, replacements of one insurance product with another, and illustrations of expected future policy values.
  • Q: - 7. Section 5 of the paper discusses the role supervisors can play in providing guidance relating to conduct of business risk.
    • Could you suggest any examples of particular matters on which supervisory guidance could be useful?
  • AAA - The IAIS may want to consider providing additional details to the third bullet of paragraph 141 on page 29 on ways the supervisor could enhance customer awareness as a means of mitigating conduct of business risk.
    • We would suggest that such information could include a straightforward, detailed comparison of the purpose, potential pros and cons, and a means of comparing the value of significant insurance products, etc.

2015 0501 - AAA to IAIS - Committee Comments To IAIS on Conduct of Business Risk Draft Paper, American Academy of Actuaries - 4p