Featured Product

    FSI Brief on Insurance Regulatory Measures in Response to COVID Crisis

    April 23, 2020

    FSI published a brief report providing a non-exhaustive summary of the regulatory measures announced by insurance authorities to achieve four objectives amid COVID-19 pandemic. These objectives are preserving capital adequacy of insurers, mitigating excessive procyclical investment behavior of insurers, providing temporary relief from non-essential regulatory and supervisory requirements, and preserving the continuity of insurance coverage.

    The far-reaching impact of COVID-19 calls for sustained vigilance on the part of supervisors and insurers. The FSI brief highlights that many insurance authorities have responded mainly by taking measures to provide operational relief to insurers from regulatory and supervisory requirements. Such measures, which will help insurers to enhance risk monitoring of their COVID-19 financial exposures, include:

    • Extending deadlines to submit regular supervisory reports
    • Allowing submission of pro-forma unaudited financial reports (Guernsey, Jersey, Tunisia)
    • Postponing public consultation of new or revised regulatory or supervisory measures (Canada, Dubai, EIOPA, Malaysia, Peru, Singapore, New Zealand, and the United Kingdom)

    Additionally, some authorities have set out expectations for insurers to conserve capital through prudent exercise of dividend and variable remuneration policies. The brief highlights that capital-related measures should relieve supervisory pressure and reduce the tendency of insurers to manage their investments procyclically. These measures include extending the supervisory intervention ladder, triggering the countercyclical lever, and recalibrating capital requirements. Other capital-related measures in response to COVID-19 include the following:

    • Allowing loans or premium payment deferrals not to increase capital requirements (Canada, South Africa)
    • Adjustment to capital requirements for interest rate risk (Canada, Malaysia)
    • Favorable consideration of requests for application of transitional measures on technical provisions under Solvency II (Germany, Poland, United Kingdom)

    The extraordinary regulatory measures to provide operational relief to insurers and preserve the continuity of insurance services should be reviewed constantly. A well-designed solvency framework should stand the test of time and should not require frequent ad hoc adjustments that may go against the intended policy objective of withstanding extreme events. Care should be taken to avoid morally hazardous behavior among insurers that could encourage them to expect regulatory relief when the next crisis arrives. As we look toward the post-pandemic phase, the extraordinary measures that are currently warranted will need to be unwound. These recent actions by supervisors and insurers may have long-lasting implications for the industry. Their potential effect on the industry’s reputation and trustworthiness should be carefully considered. An exit strategy that balances sound risk management practices with the need to treat customers fairly will become necessary for insurers and supervisors.


    Related Links 

    Keywords: International, Insurance, COVID-19, Solvency II, Reporting, Deadline Extension, Capital Requirements, Volatility Adjustment, FSI

    Featured Experts
    Related Articles

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7875