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

    Related Articles
    News

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Methods of Prudential Consolidation

    EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).

    April 15, 2021 WebPage Regulatory News
    News

    EBA Updates List of Other Systemically Important Institutions in EU

    EBA updated the list of other systemically important institutions (O-SIIs) in EU.

    April 15, 2021 WebPage Regulatory News
    News

    BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks

    BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.

    April 14, 2021 WebPage Regulatory News
    News

    UK Authorities Welcome FSB Review of their Remuneration Regime

    UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.

    April 14, 2021 WebPage Regulatory News
    News

    PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators

    PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.

    April 14, 2021 WebPage Regulatory News
    News

    MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5

    MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.

    April 14, 2021 WebPage Regulatory News
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Proposes to Enhance Assurance Expectations for Basel Returns

    OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.

    April 13, 2021 WebPage Regulatory News
    News

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.

    April 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6858