Mutuals and cooperatives see step forward in campaign for proportional supervision
The global mutual and cooperative insurance community has seen progress in its campaign for regulatory consideration.
The International Cooperative and Mutual Insurance Federation (ICMIF), and the Association of Mutual Insurers and Insurance Cooperatives in Europe (AMICE), welcomed an application paper calling for proportionality with the regulation and supervision of mutuals, cooperatives and community-based organisations (MCCOs).
The application paper, issued by the International Association of Insurance Supervisors (IAIS), outlines the need for proportionality when using the Insurance Core Principals (ICPs), which are a globally accepted framework for the supervision of the insurance sector.
According to ICMIF chief executive Shaun Tarbuck the paper is recognition that MCCOs are an important element of the insurance industry: “This issues paper is a strong recognition that MCCOs are an important business model for improving access to insurance. We support the paper’s discussion on relevant proportionality in all national jurisdictions, and we will be supporting ICMIF members in all countries to ensure this is upheld.”
The paper also highlights: “Capital requirements for a MCCO may require specific consideration. The financing of the business/activities by MCCOs is different from that of traditional share companies. Where in the case of an insurer as a share company the risk is transferred from insured to insurer; a MCCO is essentially a risk-sharing mechanism between members.”
IAIS continues: “Within the framework of the ICPs mentioned above the supervisor should consider how to accommodate, if appropriate, these specific features of MCCOs in its design and application of capital requirements.”
The application of capital requirements like Solvency II to MCCOs has been an issue flagged by the ICMIF and AMICE for a number of years.