Featured Product

    FSB Welcomes IAIS Proposal on Systemic Risk Framework for Insurers

    November 14, 2018

    FSB welcomed the proposal of IAIS on holistic framework for the assessment and mitigation of systemic risk in the insurance sector. The framework sets out the activities-based approach for sector-wide risk monitoring and management, along with the tools for dealing with the build-up of risk within individual insurers. Comments on the consultation are invited by January 25, 2019. The holistic framework is slated for adoption in late 2019, with implementation beginning in 2020.

    In its framework, IAIS proposed to evolve its current approach to systemic risk by:

    • Recognizing that systemic risk may arise from both the collective activities and exposures of insurers at a sector-wide level as well as from the distress or disorderly failure of individual insurers
    • Addressing cross-sectoral aspects of systemic risk, by comparing the potential systemic risk stemming from the insurance sector with other parts of the financial system
    • Moving away from a binary approach in which certain additional policy measures are only applied to a relatively small group of insurers (the identified global systemically important insurers, or G-SIIs), to an approach with a proportionate application of an enhanced set of policy measures targeted at the exposures, and to activities that can lead to systemic risks from the insurance sector 

    The holistic framework includes the following key elements:

    • An enhanced set of supervisory policy measures for macro-prudential purposes providing the preemptive part of the framework
    • A global monitoring exercise by IAIS designed to detect the possible build-up of systemic risk in the global insurance sector at an individual insurer level and at the sector-wide level
    • Where a potential systemic risk is detected, supervisory powers of intervention that enable a prompt and appropriate response
    • Mechanisms that help ensure the global consistent application of the framework, through a collective assessment of potential global systemic risk and a coordinated supervisory response, when needed
    • An assessment by IAIS of the consistent implementation of enhanced ongoing supervisory policy measures and powers of intervention

    In light of the progress with the proposed holistic framework, FSB, in consultation with the IAIS and national authorities, has decided not to engage in an identification of G-SIIs in 2018. FSB will assess the recommendation of IAIS to suspend G-SII identification from 2020 once the holistic framework is finalized in November 2019. In November 2022, FSB will, based on the initial years of implementation of the holistic framework, review the need to either discontinue or re-establish an annual identification of G-SIIs, in consultation with the IAIS and national authorities. FSB will receive, from IAIS, an annual update of the IAIS assessment of systemic risk in the global insurance sector and of the supervisory response. IAIS will continue its annual global monitoring exercise, including the annual data collection from individual insurers, building on the current G-SII data collection template and instructions, and implement additional data collection from supervisors, as necessary, to support an assessment of sector-wide trends on specific activities and exposures.


    Related Link: Press Release

    Comment Due Date: January 25, 2019

    Effective Date: Beginning of 2020

    Keywords: International, Insurance, Systemic Risk, Holistic Framework, G-SII, FSB, IAIS

    Featured Experts
    Related Articles
    News

    FSB Examines Financial Stability Aspects of Bigtech and Cloud Services

    FSB published two reports that consider the financial stability implications from the offering of financial services by bigtech firms and the adoption of cloud computing and data services across a range of functions at financial institutions.

    December 09, 2019 WebPage Regulatory News
    News

    APRA Specifies Capital Treatment of Equity Investments in ABGF

    APRA published a letter to the authorized deposit-taking institutions outlining the regulatory capital treatment of their equity investments in the Australian Business Growth Fund (ABGF).

    December 09, 2019 WebPage Regulatory News
    News

    EBA Publishes Action Plan on Sustainable Finance

    EBA published the Action Plan on sustainable finance for banks.

    December 06, 2019 WebPage Regulatory News
    News

    EBA Single Rulebook Q&A: Second Update for December 2019

    EBA updated the Single Rulebook question and answer (Q&A) tool with answers to three questions under the Capital Requirements Regulation (CRR) and the second Payment Services Directive (PSD 2).

    December 06, 2019 WebPage Regulatory News
    News

    APRA Publishes Proposal to Increase Transparency of Banking Data

    APRA proposed to substantially increase the volume and breadth of data it makes publicly available on authorized deposit-taking institutions, including banks, credit unions, and building societies.

    December 05, 2019 WebPage Regulatory News
    News

    ESMA Consults on Guide to Internal Controls for Credit Rating Agencies

    ESMA launched a consultation on the guidelines on internal controls for credit rating agencies (CRAs).

    December 05, 2019 WebPage Regulatory News
    News

    EU Finalizes Directive and Prudential Rules for Investment Firms

    EU published, in the Official Journal of the European Union, the Directive (2019/2034) and Regulation (2019/2033) on the prudential requirements and supervision of investment firms.

    December 05, 2019 WebPage Regulatory News
    News

    OSFI Revises Guideline on Principles for Management of Liquidity Risk

    OSFI finalized Guideline B-6 on the principles for the management of liquidity risk.

    December 05, 2019 WebPage Regulatory News
    News

    ESAs Publish Draft Amendments to Bilateral Margin Requirements

    ESAs published joint draft regulatory technical standards to amend the Delegated Regulation on the risk mitigation techniques for non-cleared over-the-counter (OTC) derivatives as well as a joint statement on the introduction of fallbacks in OTC derivative contracts and the requirement to exchange collateral.

    December 05, 2019 WebPage Regulatory News
    News

    RBNZ Releases Final Decisions Related to Capital Review for Banks

    RBNZ released a paper that sets out its final decisions following the comprehensive review of its capital framework for banks, known as the Capital Review.

    December 05, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 4279