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    IAIS Consults on Application Paper on Resolution Powers and Planning

    November 09, 2020

    IAIS is consulting on an application paper that is intended to provide guidance on supervisory practices for resolution powers and planning. The paper provides guidance on the application of Insurance Core Principles on exit from the market and resolution (ICP 12) and on supervisory cooperation and coordination (ICP 25), including the ComFrame standards integrated therein. The paper discusses the objectives and concepts of resolution as well as concepts around point of non-viability and entry into resolution. The paper also provides further guidance and practical examples around resolution powers, resolution planning, and resolvability assessments. The consultation period on the application paper ends on February 05, 2021.

    This paper and most of its concepts are relevant to the business of primary insurers and reinsurers as well as to the insurance legal entities and insurance groups. This application paper aims to:

    • Provide guidance to supervisors and/or resolution authorities on the practical application of resolution powers as well as on cooperation and coordination between authorities when planning for, and exercising, such powers
    • Provide guidance on resolution planning, which may be beneficial to supervisors, resolution authorities, and/or insurers, depending on the circumstances within a jurisdiction
    • Provide examples to illustrate the application of standards and guidance relevant to resolution
    • Address issues that were identified during the development of supervisory material in ICP 12 and ComFrame, including the feedback received from IAIS members and stakeholders

    The issues that were identified during the development of supervisory material in ICP 12 and ComFrame, include guidance and clarifications on expectations for resolution planning; explanations and examples of the application of resolution powers; practical application of proportionality in the case of resolution; and role of policyholder protection schemes in resolution. This paper discusses the role that a policyholder protection scheme, if established within a jurisdiction, may have in relation to certain resolution powers as well as in relation to the resolution authority. It does not, however, aim to provide a comprehensive overview on the role of policyholder protection schemes in resolution. The paper is part of a wider project, whereby IAIS is developing supporting material on recovery and resolution. An earlier paper on recovery planning was published in 2019.

    The paper also provides guidance to certain additional elements that are set out in ComFrame, which focuses on internationally active insurance groups, or IAIGs, only, in particular the requirements related to resolution planning, resolvability assessments, and crisis management groups (CMGs). The guidance in this areas is thus intended to be particularly useful for supervisors and/or resolution authorities of IAIGs where prior planning for resolution and cross-jurisdictional coordination may be beneficial. While certainly important for resolution, issues related to valuation and funding in resolution have not been discussed in detail. However, these issues are closely linked to ICPs 14 and 17 (Valuation and Capital Requirements), which are scheduled to be revised in the coming years (during the monitoring period of the Insurance Capital Standard Version 2.0).


    Comment Due Date: February 05, 2021

    Keywords: International, Insurance, Reinsurance, Resolution Planning, Resolution Framework, ICP, ComFrame, Proportionality, Resolvability Assessment, IAIS

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