Featured Product

    FSB Publishes Methodology to Assess Resolution Regimes for Insurers

    August 25, 2020

    FSB published the methodology for assessing the implementation of the key attributes of effective resolution regimes for financial institutions in the insurance sector. The methodology sets out essential criteria to guide the assessment of the compliance of the insurance resolution framework in a jurisdiction with the FSB Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes). The methodology is intended primarily for use in the assessments performed by authorities of existing resolution regimes of their jurisdiction and of any reforms to those regimes that implement the Key Attributes; it is also intended for the peer reviews of resolution regimes conducted within the FSB framework for implementation monitoring by member jurisdictions.

    The Key Attributes apply to resolution regimes for any type of financial institution that could be systemically significant or critical if it fails. Financial institutions include banks, insurers, investment and securities firms and financial market infrastructure. The Key Attributes also cover the resolution of financial groups and conglomerates and, therefore, extend to both holding companies of and nonregulated operational entities within a financial group or conglomerate. In other words, the Key Attributes constitute an "umbrella" standard for resolution regimes for all types of financial institutions. Implementation of the Key Attributes allows authorities to resolve financial institutions in an orderly manner without taxpayer exposure to loss from solvency support, while maintaining continuity of their vital economic functions. However, not all attributes are equally relevant for all sectors. This Key Attributes Assessment Methodology provides an insurance sector-specific interpretation of individual key attributes. It stresses that the insurance resolution regime of a jurisdiction should be proportionate to the size, structure, and complexity of the insurance system of a jurisdiction.

    The methodology may also be a useful tool for a jurisdiction that is adopting new resolution regimes or reviewing, reforming, or making improvements to its existing regimes. For assessments, the following four-grade scale will be used:

    • Compliant. A jurisdiction will be considered compliant with a Key Attribute when all applicable Essential Criteria are met without any significant deficiencies. 
    • Largely compliant. The grade “largely compliant” can, in particular, be used when the regime does not meet all applicable Essential Criteria, but overall the regime is sufficiently robust and comprehensive and no material risks are left unaddressed. 
    • Materially non-compliant. A jurisdiction will be considered materially non-compliant with a Key Attribute when there are severe shortcomings in the jurisdiction’s compliance with the relevant Key Attribute, including in instances where formal rules, regulations, and procedures exist but practical implementation of the Key Attribute has been weak. 
    • Non-compliant. A jurisdiction will be considered non-compliant with a Key Attribute when there is no substantive implementation of the Key Attribute, several Essential Criteria are not complied with or the resolution regime is manifestly ineffective. If there is only one Essential Criterion for a Key Attribute and the jurisdiction does not meet that criterion, then the jurisdiction will be considered noncompliant with respect to that Key Attribute.

    FSB also issued a note explaining the application of the insurance Key Attributes Assessment Methodology and the Key Attributes during the period of suspension of the designation of Global Systemically Important Insurers (G-SIIs). It states that the Key Attributes continue to apply during the suspension period to any insurer that could be systemically significant or critical in failure. National authorities may apply to certain insurers the requirements specific to G-SIIs, which are the requirements for a crisis management group, institution-specific cross-border cooperation agreements, and resolvability assessments. In the event of a 2022 decision by FSB to discontinue the G-SII list, FSB will review the scope of application of G-SII-specific requirements in consultation with the IAIS.  The insurance Key Attributes Assessment Methodology was developed in collaboration with experts from FSB jurisdictions, relevant standard-setting bodies, the International Monetary Fund, and the World Bank. 

     

    Related Links

    Keywords: International, Insurance, Resolution Regime, Key Attributes, Insurance KaaM, Systemic Risk, G-SII, FSB

    Featured Experts
    Related Articles
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Publishes Risk Dashboard for Third Quarter of 2020

    EBA published the quarterly risk dashboard, along with the results of the Risk Assessment Questionnaire survey among 60 banks and 15 market analysts.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Analysis Shows Privacy as Biggest Concern in Use of Digital Euro

    ECB concluded the public consultation on the introduction of a digital euro in EU.

    January 13, 2021 WebPage Regulatory News
    News

    ECB Finalizes Guide on Supervisory Approach to Bank Consolidation

    ECB published a guide that sets out the supervisory approach to consolidation in the banking sector.

    January 12, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6432