IV Conference on Insurance Regulation and Supervision in Latin America

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IV Conference on Insurance Regulation and
Supervision in Latin America Comparative Study
on Insurance Regulation and Supervision in Latin
America
9 May 2003 Punta Cana, Dominican Republic
Yasumasa Tahara Directorate for Financial, Fiscal
and Enterprise Affairs, OECD
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• What is this comparative study?
• Oaxaca Conference in 2000
• 16 Particularities
• What we are doing now?
• Update/Verification and New Issues
• Some Findings
• Asking for Your Co-operation

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I. What is Comparative Study?

• First OECD/IAIS/ASSAL Conference on Insurance
  Regulation and Supervision in Latin America, 6-8
  September 2000, Oaxaca, Mexico
• Survey covered 18 Latin-American Countries
  participated in the Oaxaca Conference
• 16 Particularities identified

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II. 16 Particularities

• Supervisory Authority Specialising in Insurance
  Supervision or Financial Supervision including
  Insurance
• Admissibility of Composite Insurers
• Non-necessity of Business Plan for Licensing
• Restrictions on Market Access
• High Periodicity of Reporting
• European Type of Solvency Requirements

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II. 16 Particularities (Continued)

• Non-adoption of Prudent-man Rules
• Restrictions on Portfolio Investment Abroad
• High Proportional Weight of Other Investments
• Maximum Retention Limit
• Registration System for Foreign Reinsurance
  Companies
• Internal Auditor

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II. 16 Particularities (Continued)

• Non-existence of Policyholders Protection Funds
• Relatively High Number of Insurance Companies in
  Financial Difficulties
• Non-existence of Compulsory Motor Insurance
• Non-existence of Self-regulatory Functions of
  Insurance Industry Associations

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III. Revising Comparative Study

• From Last Year
• Updates and Verifications
• Business Plan / Accounting Principles
• New Issues to be handled
• Consolidated Supervision / Corporate Governance
  / Systemic Risks

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IV. Some Findings

• 1. Supervisory Structure (1st Particularity)
• Ministrys Roles in Supervision
• No Role Reported in 2000.
• Several Countries Have Reported Their Supervisory
  Roles.
• Co-ordination among Supervisory Authorities
• Consolidated Supervision Required in 4 Countries.
  
• For Co-ordination, Committee Structure Adopted in
  6 Countries.

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VI. Some Findings

• 2. Specialisation (2nd Particularity)
• Composite Insurance Companies
• New establishment prohibited in 2 more countries.
• Cross-Distribution of Banking and Insurance
  Products
• Most countries prohibit
• insurance companies to produce or distribute
  banking products.
• banks to produce insurance products.
• Many countries allow banks to distribute
  insurance products.

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VI. Some Findings

• 3. Corporate Governance and Internal Control
• Many countries report there is no explicit legal
  provisions regarding corporate governance.
• Some countries (Mexico, Peru and Venezuela) have
  regulations on the functions and responsibilities
  of governing body.
• Structure and Duty of the Board of Directors /
  Compliance Officer
• About a half of the countries report their
  regulations on internal control, another half
  report no regulation exists.
• Implementation of Internal Control System /
  Internal Audit Unit / Assessment of Internal
  Control

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VI. Some Findings

• 4. Business Plan (3rd Particularity)
• Only 6 Countries Reported Positively in 2000
  Study.
• Definition
• Description of the kinds of risks the company
  proposes to cover
• Reinsurance plan
• Estimated setting-up costs and financial means
• Feasibility Study
• 11 Countries Have Already Responded Positively.

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VI. Some Findings

• 5. Accounting Principles
• 10 countries with their own GAAP
• 2 countries report their GAAP generally follow
  the IAS
• 9 countries with the IAS
• Honduras from 1997
• El Salvador from 2000
• Guatemala from 2002
• 14 countries with statutory accounting principles

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V. Schedule and Requests

• Please register contact person to
  yasumasa.tahara_at_oecd.org or fax [phone]
  by the end of next week (May 16th).
• Tables (Should be Prioritised) Please check the
  figures and description in the table and send it
  to us by the end of May. The earlier, the
  better.
• Draft text Please check the draft text and give
  us comments by the end of May.
• As for the countries we need to ask additional
  information, please send us the answers as soon
  as possible.

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Thank you for your co-operation