Brazil declines to take a Solvency II approach to insurance regulation choosing IAIS mode Despite a host of Latin American countries opting to take the Solvency II-based route to insurance regulation Brazil, the largest economy in the region, will instead follow the approach outlined by the International Association of Insurance Supervisors (IAIS), according to a senior figure at the country's regulator. In the last 18 months Mexico, Chile and Peru have all announced they will take a Solvency II approach. However, Eduardo Fraga, coordinator of solvency monitoring at the Brasilia-based Superintendency of Private Insurers (Susep) says the Portuguese-speaking country is not going to follow suit. In 2005 Susep introduced a policy of gradual upgrading its existing regulatory framework with each risk related to capital requirements regulated separately. Studies on market and operational risk have already been completed with a credit risk module to be introduced in January 2011. "Instead Brazil's model for financial regulation has been devised on the basis of IAIS standards. While these are being introduced, Brazil will be sticking with existing solvency margins that are analogous to Solvency I", says Fraga. According to Carlos da Matta, partner at the Sao Paulo offices of consultancy Pricewaterhousecoopers, the full overhaul of Brazil's solvency regulation is unlikely to occur before 2016 due to a lack of regulatory resources. Pointing to the fact that Susep has not yet fully implemented international financial reporting standards, he says it has only acquired the technical capability to roll out existing requirements in the last 12 months. A full report on the development of risk-based solvency standards in Brazil and Mexico will appear in the September issue of Life & Pension Risk. ...
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