edward lloyd ’ s coffeehouse began covering maritime risks, the industry has helped others absorb the effects of damaging events. in doing so insurers have helped people progress and businesses boom. of course, as we at dnb know all too well : those who deal within an industry based on trust and reliability must themselves show outstanding behavior. in other words : insurers must adhere to the highest of principles. • and luckily many of them do and more than that! i can give you several impressive examples of insurers stepping in to help rebuild and reimburse damages, even beyond what was promised. • take for instance a lloyd ’ s member named cuthbert heath : in 1906 a massive earthquake destroyed much of san francisco. bis central bankers ’ speeches heath insisted on paying not just for earthquake damage but also for what was destroyed by the fires that raged thereafter for three days. he instructed his san franciscan agent to pay all policyholders in full, irrespective of the terms of their policies. the agent followed his orders and the insured were promptly paid. • more recently and closer to our home : just days after the tragic event of the downing of flight mh17 in july of this year – in which 298 passengers lost their lives, 198 of whom were dutch citizens – dutch insurers collectively announced they would pay out all damages to policyholders, even if certain terms of their policies would prohibit this. • and to give you a few more examples of the industry helping people to get back on their feet : – it paid out damages after cyclone sandy flooded large parts of new york city ; – it paid policyholder claims when floods and bushfires destroyed lives and properties in australia ; – and it helped people and businesses in japan recover from the destruction caused by the 2011 tsunami. • in doing so in all of these cases, the industry helped those in need and also cemented its reputation as a solid and reliable industry. this promptness to deliver gives people the means to carry on and businesses the confidence to start over. • as for the future, it will be interesting to see how the insurance industry deals with new and emerging risks such as climate change, but also cyber - crime and reputational damage. or how the advent of selfdriving cars will affect their business model. • iais ’ s role in in this cannot be overstated, as it sets standards for supervisors for the development and maintenance of fair, solid and safe insurance markets. • i am confident that this

##ity. many banks relied excessively on wholesale funding to finance securitised, illiquid assets. in addition, there were poor incentives and governance at the firm level along with a lack of transparency, which made it nearly impossible to understand a bank ’ s exposures or the quality of the capital backing them. so what has the committee done in response? first, we have strengthened the capital base. raising the quality, consistency and transparency of the capital base has been one of the primary objectives of the committee ’ s reform programme. overall, these rules that will govern the capital structure represent a substantial strengthening of the definition of capital. by itself, the new definition of capital is a significant improvement to the global capital regime, which will be enhanced further by better risk coverage, the introduction of buffers and higher minimum capital requirements. on top of this comes the higher level of capital. in addition to raising the quality of the capital base, the committee has improved risk coverage of the regulatory framework and more improvements are on the way. our goal is to ensure that all material risks are captured. during the crisis, many risks were not reflected in the risk - based regime. the committee has substantially strengthened the rules that govern capital requirements for trading book exposures as well as for complex securitisations and exposures to off - balance - sheet vehicles. the revised trading book framework, on average, requires banks to hold around three to four times the old capital requirements. we are now finalising rules that will strengthen the capital requirements and risk management standards for counterparty credit risk. an additional element to the regulatory capital framework is a leverage ratio, which will serve as a backstop to the risk - based capital requirement. in the lead - up to the crisis, many banks reported very strong tier 1 risk - based ratios while, at the same time, managed to build up high levels of on - and off - balance sheet leverage. the use of a supplementary leverage ratio will help contain the build - up of excessive leverage in the system. it will also serve as an additional safeguard against attempts to “ game ” the risk - based requirements and will help address model risk. in july, the committee ’ s oversight body of governors and heads of supervision agreed on an indicative calibration of 3 % as a minimum for the leverage ratio to be tested during the parallel run period, with a view to be implemented on january 1st, 2015. for global banks with significant capital markets activities, this 3 % cal