IAIS Consults on Application Paper on Resolution Powers and Planning
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
Related Articles
BIS Paper Studies Impact of Fintech Lending on Small Businesses in US
The Bank for International Settlements (BIS) published a paper that studies impact of fintech lending on credit access for small businesses in U.S.
UK Regulators Issue CRR Changes and Stress Test Scenarios for Banks
The Prudential Regulation Authority (PRA) issued the policy statement PS8/22 to amend the Own Funds and Eligible Liabilities (CRR) Part of the PRA Rulebook and update the supervisory statement SS7/13 titled "Definition of capital (CRR firms).
EBA Launches EU-Wide Transparency Exercise in 2022
The European Banking Authority (EBA) launched the EU-wide transparency exercise for 2022, with results of the exercise expected to be published at the beginning of December, along with the annual Risk Assessment Report.
SRB on CRR Quick-Fix to Policy for Multiple Point of Entry Banks
The Single Resolution Board (SRB) welcomed the adoption of the review of the Capital Requirements Regulation, or CRR, also known as the "CRR quick-fix."
EC Rule Lists Advanced Economies for Market Risk Capital Calculations
The European Commission (EC) recently adopted the Delegated Regulation 2022/1622, which sets out the regulatory technical standards to specify the countries that constitute advanced economies for the purpose of specifying risk-weights for the sensitivities to equity.
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.
