57. FINMA supervision is particularly strong in quantitative analysis and group
supervision, while risk management, internal control, and governance requirements are
relatively new. FINMA has highly qualified staff. The granular and aggregated approaches
towards solvency of a group are also commendable. The Swiss Qualitative Assessment (SQA)—
designed to provide a comprehensive and in-depth understanding of insurers’ governance, risk
management, compliance, and internal controls environment and processes, and identify for each
insurer areas of needed remediation—was first carried out in 2008 and covers all insurers.
58. The intensity of onsite supervision needs to be enhanced to complement FINMA’s
strong offsite supervision. FINMA has various ways to gather information and make assessments.
As a result, its onsite inspections tend to be narrow in scope and, compared to some jurisdictions,
less frequent. More in-depth onsite inspections would enhance FINMA’s understanding of insurers’
operations and facilitate more accurate risk ratings.
59. In order to maintain Switzerland’s position as a global insurance center and
reinsurance hub, enhancements are needed to the regulatory framework.
FINMA’s review of expanding public disclosure requirements should serve to bring Switzerland
more in line with international standards.
FINMA has yet to articulate specific rules on business conduct. The Swiss authorities should
press on with the legislative effort to improve policyholder protection and enhance broker
supervision.
Requirements on the investments of reinsurers need to be strengthened. The lack of a
requirement to have tied assets backing up reinsurance liabilities could weaken the asset
quality of reinsurers as well as FINMA’s ability to liquidate them.
Branches of companies headquartered outside Switzerland and conducting only reinsurance
business are exempted from supervision. FINMA is encouraged to more actively communicate
its approach regarding supervision of these institutions.
SWITZERLAND
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