PublicHigh Level Messages: ICS Version 2.0 for themonitoring period and Comparability
Assessment
The Insurance Capital Standard (ICS) is being developed by the International Association ofInsurance Supervisors (IAIS) with the purpose of creating a common language for supervisory
discussions of group solvency of Internationally Active Insurance Groups (IAIGs) to enhance
global convergence among group capital standards. The ultimate goal is a single ICS that
includes a common methodology by which one ICS achieves comparable, ie substantially thesame, outcomes across jurisdictions.
A milestone in the journey towards the ultimate goal is the publication of ICS Version 2.0 for
the monitoring period. Starting from January 2020, the ICS enters a five-year “monitoringperiod”, during which it will be used for confidential reporting to the group-wide supervisor(GWS), discussion in supervisory colleges, and further analysis by the IAIS. It will not be used
as a prescribed capital requirement (PCR); that is, the ICS results will not be used as a basis
to trigger supervisory action and IAIGs are not expected to manage their business to the ICS.
ICS Version 2.0 for the monitoring period is also not for decision making by supervisors, nor
is it intended for use by third parties. In this context, the IAIS encourages IAIGs not to disclose
their ICS results to any third parties.
The purpose of the monitoring period is to monitor the performance of the ICS over a periodof time, and not the capital adequacy of IAIGs. For this purpose, the monitoring period isintended to be a period of stability for the reference ICS and additional reporting. This does
not preclude possible clarifications/refinements and correction of major flaws or unintended
consequences identified during the monitoring period to improve the ongoing development ofthe ICS.
The active participation of IAIGs in the monitoring period is very important to provide effective
feedback on the ICS (covering both the reference ICS and, if applicable, additional reportingat the discretion of the GWS). Although the Aggregation Method (AM) is not part of ICS Version
2.0 for the monitoring period, the IAIS will continue to collect data from interested jurisdictions
relevant to the development of the AM. Through this approach, the IAIS aims to be in a positionby the end of the monitoring period to assess whether the AM provides comparable, ie
substantially the same, outcomes to the ICS.
The IAIS is seeking to make participation as large as possible across different jurisdictions
and business models in order to ensure that the ICS captures risk appropriately. With that aim,the IAIS will send a letter to group-wide supervisors strongly encouraging the participation ofIAIGs in their jurisdiction with an expectation that GWSs will convey the message to theirIAIGs, in an appropriate form. While the IAIS will strongly encourage IAIGs to participate, theIAIS is a standard setting body and does not have the legal power to directly mandate any
PublicHigh Level Messages: ICS Version 2.0 for the monitoring
period and Comparability Assessment
14 November 2019

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reporting and ultimate decision making rests with the GWS. In addition, there will be an annual
review point for IAIG participation.
The feedback received during the monitoring period will be used to further improve the ICS.
In addition to the feedback from supervisors, the IAIS will consider feedback from stakeholder
engagement, a public consultation and the results of an economic impact assessment, all ofwhich could result in changes to ICS Version 2.0. During the monitoring period, the IAIS
intends to maintain the same level of engagement with stakeholders as it had during fieldtesting.

PublicHigh Level Messages: ICS Version 2.0 for the monitoring
period and Comparability Assessment
14 November 2019

Page 2 of 2