Abu Dhabi is a strange place. Petrodollars have conjured huge glass and steel buildings out of the desert sand, but the visitor never quite loses the feeling that the marble palaces and mosques are all a mirage, that you will go to sleep in your hotel bed and wake up on the cold sand by a deserted creek, with no access to room service. On reflection, maybe I should not have watched Disney’s re-make of Aladdin on the flight over.
Doubtless the powerful djinns at the International Association of Insurance Supervisors had this in mind when they chose to hold their annual conference in Abu Dhabi this year. In an impressive display of magic, they summoned the Insurance Capital Standard (version 2.0 for monitoring period) out of thin air in front of Princess Victoria and hundreds of astonished insurance lobbyists. The feat was all the more amazing because we had been told the ICS was at death’s door, having collapsed in field testing under the weight of its internal contradictions.
The apparition came a little later than predicted. We could all hear scuffles and angry shouting behind the scenes. The outlines of the ICS flickered briefly against the stars. Then it stood clearly in front of us, not just alive but more powerful than ever, ready to come into force next year.
Was it real? We touched it gingerly. It seemed real enough, with three buckets in its valuation method, and a percentile based MOCE that looks much prettier than the ugly Risk Margin we are used to.
Nobody knew quite what to do. Some lobbyists knelt down to venerate a new international standard. Others took fright at the volatility of the creature, and ran away to write Press Releases denying its existence. This principled atheism was slightly spoilt by their willingness to work constructively with the ICS in the event that it turned out to exist after all.
In practice we have five years to admire the numbers produced by the ICS during the monitoring period. During this time, supervisors and third parties have been told not to touch it. The attendant IAIS djinns prophesied that at the end of this period the ICS would magically be transformed into a hard capital requirement.
American djinns can always go one better, and those present maintained that they would in the same timescale summon up an Aggregation Method which produces comparable outcomes to the ICS. That will indeed be a wonder to behold.
In the departure lounge at Abu Dhabi airport, I realised the burden of responsibility that I carried. If I chose Terminator Dark Fate for my in-flight entertainment, would the ICS still exist when I landed at Heathrow?