The Insurance Market Assessment
The ICPs can be properly assessed only in the context of an overall analysis of conditions in the insurance sector, including an assessment of the performance of and prospects
for the sector. Consequently, it is necessary to analyze and form a view on the adequacy of provisions, profitability, business trends, and capitalization of the sector while using recent data (see chapter 4 for a discussion of sectoral analysis).28
A key feature of the assessments made in this context of an overall analysis needs to be the assessment of ICP 1—the conditions for effective supervision. As noted earlier, the elements of this ICP are often outside the control of the supervisor. When a supervisor is doing a self-assessment for other purposes or for an internal examination, then this ICP may be less important. However, within the context of a broader financial sector assessment, it is a critical element because it provides the necessary links to considering development and stability. The ICPs also recognize some steps that the supervisor may take in the face of weaknesses in the conditions.29 Examples would include the encouragement or sponsorship of statistical studies where they are not being done otherwise. Weaknesses in the asset markets may signal that it is reasonable to impose more onerous or specific obligations on investments. Weaknesses in the legal system may lead to a response to establish separate specific procedures for the sector. Those kinds of steps may be considered in the context of recommendations to strengthen the system as a whole in the face of weak conditions.
