EIOPA Supports ESRB Views on Liquidity Risk Monitoring for Insurers
EIOPA issued a statement supporting views of ESRB on the importance of improving the monitoring of liquidity risks in the insurance sector. Earlier, in a letter addressed to the EIOPA Chair, ESRB strongly encouraged EIOPA and its members to promptly finalize and operationalize the framework for monitoring of liquidity risks in the insurance sector. In its statement, EIOPA highlights that, as a response to COVID-19 crisis, it has already developed and put in place a proportionate framework to enhance the nature and the consistency of the information collected on liquidity risks. Until now, there is no evidence of the materialization of liquidity risks in the insurance sector.
The ESRB letter, states that, to date, there has been a lack of consistent data for assessing the magnitude of potential liquidity risks in the insurance sector and the related financial stability risks. Therefore, supervisors may not be in a position to judge with confidence the scale of potential liquidity pressures in the future and the potential financial stability implications of a crystallization of such liquidity risks. In the past, ESRB has flagged that the Solvency II review presents an opportunity to better enable supervisors to address liquidity risk of insurers with a vulnerable liquidity profile. Additionally, ESRB judges that, in the near term, priority should be given to improved monitoring of liquidity risks in the insurance sector, to enhance Europe’s preparedness to respond to potential future shocks that could lead to a deterioration in financial stability conditions.
In response, this recent statement from EIOPA clarifies that, as part of the Solvency II Review, EIOPA has consulted on concrete proposals to reinforce the macro-prudential dimension of the regime; this includes elements to strengthen the tools available to assess and monitor liquidity risks. The proposals will be assessed in the coming months in face of the COVID-19 evidence. The statement adds that EIOPA will continue to contribute to the ESRB work to support the stability of the insurance sector and its contribution to the overall stability of the financial system.
Related Links
Keywords: Europe, EU, Insurance, Solvency II, Liquidity Risk, Financial Stability, COVID-19, Solvency II Review, ESRB, EIOPA
Featured Experts
Adam Koursaris
Asset and liability management expert; capable modeler; risk and capital specialist
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Cassandra Hannibal
Life insurance actuary; risk management and economic capital specialist
Previous Article
BoE and PRA Publish Annual Reports for 2019-20Related Articles
EBA Publishes Final Regulatory Standards on STS Securitizations
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
ECB Further Reviews Costs and Benefits Associated with IReF
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
EBA Publishes Funding Plans Report, Receives EMAS Certification
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
IOSCO Welcomes Work on Sustainability-Related Corporate Reporting
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
BoE Allows One-Day Delay in Statistical Data Submissions by Banks
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
ACPR Amends Reporting Module Timelines Under EBA Framework 3.2
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
APRA to Modernize Prudential Architecture, Reduces Liquidity Facility
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
