The International Association of Insurance Supervisors (IAIS) has published the Guidance Paper on the Treatment of Non-Regulated Entities in Group-Wide Supervision (paper). The paper is designed to assist insurance supervisors to address regulatory gaps that were revealed through the global financial crisis and minimise regulatory arbitrage opportunities. The release responds to the recommendation by the G20 and Financial Stability Board that standard setting bodies review the scope of financial regulation and address supervisory gaps.

The paper outlines eight key features of effective group-wide supervision. Amongst these features are appropriate consideration of group structures and the full range of risks posed by non-regulated entities. An additional feature is that supervisors should understand and assess the sources of risk to the insurance group and regulated entities from any non-regulated entities within and/or connected with the group.