So rather than trying to create a single capital framework that would work for all types of financial institutions, we decided to propose an aggregation approach that incorporates approaches developed specifically for each type of institution and its risks. The BBA uses the existing and time-tested frameworks that have been tailored specifically to measure appropriately particular risks.
It assesses insurance risks using an insurance capital framework and banking risks using our banking capital framework. The suitability of such an aggregation approach for regulating the capital of a large, internationally active insurance group is being debated currently at the IAIS, as I will discuss in a moment.