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Strengthening Insurance Sector Regulation and Supervision in Mauritius

Project Development Objective (PDO)

The objective of this project is to support the Financial Services Commission of Mauritius to strengthen prudential regulations and risk-based supervisory and resolution frameworks for the insurance sector. 

Background

The insurance sector in Mauritius comprises both domestic and offshore entities. The market consists of a diverse product mix, highlighting the need for a risk-sensitive approach to capital assessment.
In July 2011, the World Bank conducted a detailed assessment using the Insurance Core Principles of the International Association of Insurance Supervisors and published its findings in April 2012. Although this assessment recognized the exceptional progress made by the Financial Services Commission under the transformational circumstances faced by the insurance sector Mauritius, the assessment also identified areas where risk-based supervision can be strengthened and compliance with Insurance Core Principles can be improved. In light of the increasing sophistication of the insurance sector and its envisioned role as a platform for propelling the economic growth and competitiveness of Mauritius in the coming decade, the role of the insurance regulator and supervisor in ensuring that the financial system remains resilient needs to be intensified. Therefore, the need to provide technical assistance to the insurance supervisor to strengthen the effectiveness of risk-based management and supervision of the insurance sector, at company and industry levels, and to undertake measures that will boost consumer protection and investor confidence is urgently needed. 

Activities

The project’s activities concentrate on lifting the risk focus of both the supervisory agencies and the insurance sector as a whole and enhancing the resolution schemes, including policy holder protection mechanisms: 
1.  Developing a market assessment report
2.  Assisting with the development and implementation of a new risk management framework, which
     includes a consulting report with recommendations on a risk management framework, and the
     rules on risk management
3.  Assisting with the design and implementation of risk-based supervision, including a consulting
     report with recommendations on risk-based supervision; new supervisory manual material and
     tools; and final rules on implications of risk-based supervision for insurers
4.  Providing support for the design and implementation of insurance resolution schemes, including
     a consulting report with recommendations on a resolution scheme; a consultation seminar; and
     final rules on resolution schemes 

Expected Outcomes

The project expects to deliver the following: 
1.  A better managed insurance sector by encouraging sounder risk management and risk
    assessment 
2.  A more efficient, viable, and financially sound insurance sector, because insurers will seek more
    economically aligned strategies and pricing on both the liability and the asset sides of their
    balance sheets
3.  Better placement of the Financial Services Commission to oversee the risk assessment and
     supervision of the sector and have improved scope for intervention in a measured and credible
     way
4.  A necessary element for sound resolution of insurance companies in the event that they fail or
    need to be resolved through the most severe level of intervention 
Overall, this important set of outcomes will enhance the reputation and potential for Mauritius to develop its financial sector in line with the government’s objectives. The observance of the mentioned Insurance Core Principles will be improved.