IAIS published the Global Insurance Market Report (GIMAR) for 2019. The report discusses the global insurance and reinsurance sectors, with focus on the performance of the sector, key risks facing the sector, and key developments in the global insurance market from a supervisory perspective. The report also presents the results of the Global Reinsurance Market Survey covering 47 reinsurers in nine jurisdictions in North America, Europe, and Asia while linking the financial position of reinsurers to the broader financial economy.
The GIMAR report discusses the performance of life insurance sector within a prolonged low-yield environment. It highlights that the sector may be subject to various risks and challenges, given a potential rate increase or a sluggish growth of guaranteed rate products sales. The report for this year also focuses on the specificities of cyber insurance and how insurers tackle risk pricing in light of the lack of historical data sets. The report presents the key challenges and regulatory considerations associated with cyber insurance. The report recommends that supervisors need to share information and best practices to enhance their own ability to evaluate the pricing and exposure of insurers within their jurisdictions. They also need to consider how they can support an integrated approach to cyber risk that will adequately reflect the risk in insurers’ strategy and risk appetite. Initiatives are under way in several countries to foster greater risk awareness and to push insurers to adopt conscious risk management and supervision, but additional efforts are required by both supervisors and insurers.
One key finding of the Global Reinsurance Market Survey is that the reinsurance market is still recovering and further consolidating its capacity following the series of severe natural catastrophes that took place in 2017. However, capital has proven an effective loss buffer when held at sufficient levels. The Survey demonstrates the extent to which the reinsurance industry relies on retrocession as a tool to reduce and diversify risk. If the trend of declining retrocession persists, the industry may experience a shift toward other risk-mitigating mechanisms. Equity and debt securities still remain the largest asset classes for investment in the reinsurance industry, cumulatively accounting for 77.5%. Short-term portfolios tend to be invested in highly liquid securities, while reinsurers’ exposures are mainly concentrated in the insurance market.
Keywords: International, Insurance, Reinsurance, GIMAR, Macro-Prudential Policy, Cyber Insurance, Life Insurance, Regtech, Global Market Reinsurance Survey, IAIS
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.