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ANNUAL REPORT 2011-12
adherence to the International Association of Insurance
Supervisors (IAIS) Core Principles. In order to be able to
improve upon the categorization assigned by FSB and
gain an improved recognition from the perspective of
financial stability of the Indian financial sector, the
Government of India conveyed its agreement to submit
to the full-fl edged FSAP, proposed to be undertaken by
the IMF-World Bank in 2011.
54. FSAP exercise in the insurance sector is carried out
against the Insurance Core Principles (ICPs) by the
International Association of Insurance Supervisors (IAIS)
which are the key global standards for prudential
regulation and supervision of the insurance sector across
jurisdictions.
55. A team from IMF-World Bank had meetings with
various Regulators of the fi nancial sector and industry
participants during their on-site visit for preliminary
meeting in January 2011. A detailed review of compliance
with various core principles of IAIS in the insurance sector
was carried out during June 2011. This was followed by
another round of meetings in October 2011. This was a
fi rst such exercise carried out by independent assessors
for the insurance sector. Against the 28 core principles
assessed, there is no ICP where the observance status
is “not observed” and only in 3.5 principles was it “partly
observed”. Overall, assessed against the international
experience the observance standard was fairly satisfactory.
The report has commended on the relatively well
developed insurance regulation and supervisory
architecture in India particularly in the areas of licensing,
consumer protection, market oversight and transparency.
The report also mentions that IRDA’s ongoing supervision
of insurance companies and market is tight and displayed
a strong level of control and that the insurance industry
in India has relatively large footprint relative to other forms
of fi nancial intermediation in comparison with analogous
developing countries.
Multilateral Memorandum of Understanding (MMoU):
56. With the increasing integration of fi nancial markets
and the growing number of internationally active
insurance companies, there is an increased need for
mutual cooperation and information exchange between
insurance industry supervisors. The International
Association of Insurance Supervisors (IAIS), with a view
to encourage cooperation and information exchange
among its member jurisdictions, had adopted the
Multilateral Memorandum of Understanding (MMoU) in
its meeting held in Dubai in 2007.
57. The signatory authorities to this memorandum on
cooperation and information exchange have reached an
understanding in this memorandum recognising that
practical arrangements concerning cross-border
cooperation and information exchange are essential not
only in crisis situations, but also in the day-to-day
business of the jurisdiction supervisors; and the ability to
share information and provide assistance requires a high
standard of confi dentiality protection.
58. The objective of the MMoU is to establish a formal
basis for cooperation and information exchange between
the signatory authorities regarding the supervision of
insurance companies where cross-border aspects arise.
It includes requesting and providing information on
operations of insurance companies supervised, covering
all issues related to the supervision of insurance
companies such as licensing, ongoing supervision and
winding-up processes. The MMoU is also applicable to
the supervision of other regulated entities such as
insurance intermediaries, and to AML / CFT matters. The
provisions of the MMoU, however, do not intend to create
any legally binding obligations or to modify or supersede
any jurisdictional law; nor are these directly or indirectly
enforceable rights.
59. The IRDA’s application to the IAIS Secretariat to
become a signatory to the MMoU has been evaluated by
the Validation Team of the association. Meantime, the
Authority is laying down the regulatory framework for
sharing of information. The Regulations would lay down
the parameters for sharing of information with various
stakeholders including information sought by any agency
both within India and jurisdictions outside India; ensuring
maintenance of confi dentiality of information obtained
from other jurisdictions and circumstances and conditions
under which information may be shared. The IRDA will
have greater access to the information from other member
jurisdictions of the IAIS.
Initiatives at AML/CFT and FATF:
60. The Anti-Money Laundering (AML) and Combating
the Financing of Terrorism (CFT) (AML/CFT) guidelines
to the insurance sector were issued in March 2006 and
have passed through a thorough Mutual Evaluation and
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