Transcript Anti Money Laundering in Insurance Sector

On-Site Inspection
by
C. R. Muralidharan
Member, IRDA
Annual Seminar on Regulatory Issues for Senior Officers
of Insurance Regulatory Agencies
(November 15, 2005)
Insurance Core Principle-13
On-Site Inspection
The supervisory authority carries out on-site
inspections to examine the business of an
insurer and its compliance with legislation
and supervisory requirements.
Important Linkages
Off-site monitoring process
Supplementing analysis of the reports
received
Market information
Statistics derived from analysis of annual
report
Off-site Monitoring (ICP 12)
Analysis of data on ongoing basis to monitor and
evaluate insurers and insurance market.
Regular and systematic financial reporting business and
actuarial.
Helps identification of potential problems between onsite inspections.
Data requirement to reflect essential supervisory needs
at reasonable frequency to reduce regulatory burden
and to enhance focus.
Additional information for specific insurers could be
called for
Validation and integrity.
Market Analysis (ICP 11)
Meets the objective of supervising
individual entity and financial stability of
the insurance market
Integration of markets
Economic and other developments that
have future risk implications
Contd...
Market Analysis (ICP 11) contd..
Quantitative e.g.
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Developments in financial markets
Changes in market participant and market
share
Investment structures
Qualitative e.g.
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Legislation changes
Supervisory practices
Expected Coverage Identification of
Problems or Irregularities
Objectives of full scale inspection:
Looks into three defined categories relating to
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the financial aspects of an insurer’s operations;
how an insurer is governed;
how an insurer conducts its business and presents
itself in the market.
The approach is to see the extent of compliance
to regulatory requirements on all the above
issues qualitatively and quantitatively
Financial and Related
Operational Aspects
Solvency and capital adequacy
Forms of capital
Valuation and adequacy of technical provisions
Asset quality
Accounting and actuarial practices
Management of investments
Financial reporting and disclosure
Evaluation of technical provision
Contd...
Financial and Related
Operational Aspects contd..
Evaluation of quality of management
Internal controls
Quality of underwriting
Evaluation of technical provision
Strategic and operational direction
Reinsurance
Overall risk management
Governance Issues
Governance processes and controls including fit
and proper testing
Compliance with Acts and Regulations
The effective over sight of the risks of the
company
Linkages with internal controls
Supervisory Ladder (CARAMELS)
Capital, Asset Quality, Reinsurance, Adequacy of
Provisions, Management, Earnings Quality, Liquidity
and Subsidiaries and Related Party Transactions
Market Conduct
Dealing with customers
Integrity of conduct both as insurers and
investors
Disclosure of relevant information to
market/policyholders
Requirements for Robust
Supervision
Well defined policies, institutional and
legal framework
Efficient
market
with
information
availability
Operational independence
Trained and skilled staff