Welcome Address by Mr Koh Yong Guan, Managing Director, Monetary Authority of Singapore, at the 10th Annual Conference of the International Association of Insurance Supervisors (IAIS), 1 Oct 2003, 8.45 am, Shangri-La Hotel, Singapore
Mr Manuel Aguilera-Verduzco, Chairman of IAIS Executive Committee
Ladies and Gentlemen
Good morning and a warm welcome to Singapore, especially to those who are here for the first time.
2 The theme of the IAIS Annual Conference this year, "Building Competencies in the Insurance sector", was chosen by the IAIS to underscore the importance for regulators to continue to develop competencies in their jobs to oversee the safety and soundness of the insurance sector. I am confident that all participants will have a great learning experience over the course of the next three days. I hope you will use this occasion to network and cultivate close working relationships which are invaluable in enhancing our effectiveness as supervisors in our respective jurisdictions.
Characteristics of the new financial environment
3 Building competencies and networking is especially important given the circumstances in today's world.
4 September 11, volatile capital markets, and the repeated downgrading of reinsurers' ratings have been major challenges. Underwriting losses and selling practices that do not uphold proper market conduct rules continue to pose problems. New products with hidden risks have also surfaced.
5 The events of recent years have shown, with remarkable clarity, the inter-connectedness of our financial markets. Rapid globalization has put pressure on markets to open up at a relentless pace. Globally as well as regionally, deregulation continues at breakneck speed. As regulators and supervisors, we are constantly challenged to augment our expertise with an ever-growing knowledge base, in order to keep pace with the new activities and products generated by institutions under our regulatory purview.
6 These developments call for more communication and co-operation between regulators. As insurance companies move their operations across borders in response to the opening up of new markets, regulators must imbibe the principle of consolidated supervision. It is not sufficient for a regulator to only supervise the institution operating within its borders without consideration of the inter-relationship with its related entities in other parts of the world.
7 This development is especially relevant for Singapore. Foreign insurers make up a sizeable portion of the market in Singapore. Local insurers have been encouraged to expand overseas. The activities of foreign and local insurance companies have helped make Singapore a vibrant financial hub. It is important for MAS, in its capacity as home or host supervisor, to collaborate closely with fellow insurance supervisors in supervising insurance companies on a group-wide basis.
International Insurance Supervisory Standards
8 International organisations like the IAIS are useful forums in which regulators can meet their counterparts from other parts of the world. The standards developed by international organisations such as the BIS (Bank for International Settlements), IOSCO and IAIS provide best practice benchmarks on supervision for supervisors around the world. Since its formation in 1994, the IAIS has worked hard to develop such standards for insurance supervisors. The first set of Insurance Core Principles (ICPs) was adopted in 2000. The IMF and World Bank's Financial Sector Assessment Program (FSAP) adopted the Core Principles as the global standard. The IAIS has been working on a revised set of Core Principles to incorporate feedback from FSAP assessors as well as insurance supervisors who have started to apply the Core Principles. We congratulate the IAIS for the completion of the work on the revised Insurance Core Principles and are happy that they will be tabled for adoption at this Annual Meeting in Singapore.
9 MAS is a firm supporter of the international organisations' role in standard setting. We participate actively in the BIS and the IOSCO. We have also devoted resources to play an active role in the IAIS. As a founding member of the IAIS, the MAS is a member of the Executive Committee and other subcommittees. We are honoured to contribute to education initiatives of the IAIS as the Chair of the Education subcommittee. Singapore has been the Asian regional training centre for insurance regulators for over two years. As a further commitment to the goals of the IAIS and the crucial role it plays, we will be seconding an officer to the IAIS Secretariat in 2004.
10 The new financial landscape has thrown up both challenges and opportunities for insurance regulators and market players. The skill-sets of both regulators and market players must be sharpened. Their mindset must be to work in alignment towards achieving safety and soundness of the insurance sector. We all have a role to play in maintaining public confidence in the insurance sector.
11 The theme of this Conference "Building Competencies in the Insurance Sector" is timely. A Chinese saying goes: "One need only meet with two other people to learn something new". If this is true for only three individuals, what more when 370 regulators and insurers from over 80 countries come together? I am sure all of you will learn much from the speakers and the discussions. I hope the social events we have lined up in the evenings will provide further opportunities for interaction and relationship building, and help cement your learning experience at this Conference.
12 Let me take this opportunity to wish you a fruitful and enjoyable Conference. Thank you.