IA Publishes Guideline on Enterprise Risk Management for Insurers
IA of Hong Kong published the guideline GL-21 on enterprise risk management, or ERM, for insurers. The guideline sets out the objectives and requirements on ERM and the Own Risk and Solvency Assessment (ORSA), in addition to providing the impetus for insurers to establish effective tools to identify, monitor, manage, and mitigate risks. GL-21 shall take effect from January 01, 2020. Additionally, to monitor the overall progress of the industry in enhancing their ERM frameworks of insurers, IA is conducting a Preparation Status Survey that insurers are expected to complete on the best effort basis. Insurers are requested to complete the survey in Excel file format and have it returned to IA by August 16, 2019.
The main objective of the guideline GL-21 is to nurture a sound risk culture in the insurance industry that should be reflected in the values, attitudes, and norms of business behavior. The guideline sets out the requirements for Pillar 2 of the risk-based capital regime in Hong Kong and provides the impetus for authorized insurers to:
- Put in place a robust system of risk governance
- Proactively identify and assess their risk exposure
- Maintain sufficient capital to cover risks not captured or not adequately captured under Pillar 1
- Develop and enhance risk management techniques in monitoring and managing these risk exposures
IA has finalized the guideline on ERM, post two consultations—one consultation was conducted in May 2018 while the second was conducted in January 2019. IA issues GL-21 pursuant to section 133 of the Insurance Ordinance (Cap. 41) and its principal function is to regulate and supervise the insurance industry for the protection of existing and potential policy holders. This guideline takes into account the relevant Insurance Core Principles (ICPs), standards, guidance, and assessment methodology promulgated by IAIS. This guideline is part of the Pillar 2 of the risk-based capital regime for the insurance industry in Hong Kong. The risk-based capital regime in Hong Kong comprises three pillars: Pillar 1 covers the regulatory capital rules and requirements, Pillar 2 covers corporate governance and ERM, and Pillar 3 covers reporting and disclosure requirements.
Related Links
Effective Date: January 01, 2020
Keywords: Asia Pacific, Hong Kong, Insurance, ERM, ORSA, Regulatory Capital, Pillar 2, ICP, Risk-Based Capital Regime, IA
Previous Article
ESMA Updates the List of Guidelines Under Its Mandate in April 2019Related Articles
HKMA Sets Out Regulatory Treatment for Personal Loan Guarantee Scheme
HKMA has published a circular that sets out the regulatory and reporting treatment for loans that participating authorized institutions may grant to eligible borrowers under the 100% Personal Loan Guarantee Scheme.
ECB Completes Targeted Review of Internal Models of Banks
ECB published the results of the assessment of internal models that banks use to calculate risk-weighted assets for credit, market, and counterparty credit risks.
PRA on Regulatory Treatment of Loans Under Mortgage Guarantee Scheme
PRA published a statement on the regulatory treatment of retail residential mortgage loans under the Mortgage Guarantee Scheme, or MGS.
FCA Consults on Rules and Reporting Forms for Investment Firms Regime
FCA is consulting, via CP21/7, on the second phase of proposed rules to introduce the UK Investment Firm Prudential Regime (IFPR).
HMT and BoE Decide to Explore Central Bank Digital Currency in UK
HM Treasury and BoE announced the joint creation of a Central Bank Digital Currency (CBDC) Taskforce to coordinate the exploration of a potential central bank digital currency in UK.
EIOPA Sets Out Expectations on Use of Climate Risk Scenarios in ORSA
EIOPA published an opinion to set out its expectations on the supervision of the integration of climate change risk scenarios by insurers in their Own Risk and Solvency Assessment (ORSA).
EC Sets Out Standards for MREL Reporting by Competent Authorities
EC published the Implementing Regulation 2021/622 that lays down implementing technical standards for reporting of the minimum requirement for own funds and eligible liabilities (MREL).
BCBS to Advance Work on Suptech, Climate Risk, and Basel Monitoring
BCBS has set out the strategic work priorities, as part of its the work program for 2021-22.
Bundesbank Updates AnaCredit Reporting Requirements
Bundesbank published two circulars on AnaCredit reporting requirements. Circular 27/2021 covers changes to the reporting of branches, additional attributes to be reported for investment funds from August 01, 2021, and updates to the list of international organizations.
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.
