General Information & Client Service
  • Americas: +1.212.553.1653
  • Asia: +852.3551.3077
  • China: +86.10.6319.6580
  • EMEA: +44.20.7772.5454
  • Japan: +81.3.5408.4100
Media Relations
  • New York: +1.212.553.0376
  • London: +44.20.7772.5456
  • Hong Kong: +852.3758.1350
  • Tokyo: +813.5408.4110
  • Sydney: +61.2.9270.8141
  • Mexico City: +001.888.779.5833
  • Buenos Aires: +0800.666.3506
  • São Paulo: +0800.891.2518
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

Related Articles
News

HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5%

HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%.

April 16, 2019 WebPage Regulatory News
News

EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2

The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks.

April 16, 2019 WebPage Regulatory News
News

FDIC Consults on Approach to Resolution Planning for IDIs

FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans.

April 16, 2019 WebPage Regulatory News
News

EP Resolution on Proposal for Sovereign Bond Backed Securities

The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS).

April 16, 2019 WebPage Regulatory News
News

PRA Seeks Input and Issues Specifications for Insurance Stress Tests

PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019.

April 15, 2019 WebPage Regulatory News
News

PRA Finalizes Policy on Approach to Managing Climate Change Risks

PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix).

April 15, 2019 WebPage Regulatory News
News

EBA Single Rulebook Q&A: First Update for April 2019

EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week.

April 12, 2019 WebPage Regulatory News
News

EIOPA Statement on Application of Proportionality in SCR Supervision

EIOPA published a supervisory statement on the application of proportionality principle in the supervision of the Solvency Capital Requirement (SCR) calculated in accordance with the standard formula.

April 11, 2019 WebPage Regulatory News
News

FED Updates Form and Supplemental Instructions for FR Y-9C Reporting

FED updated the form and supplemental instructions for FR Y-9C reporting. FR Y-9C is used to collect data from domestic bank holding companies, savings and loan holding companies, U.S intermediate holding companies, and securities holding companies with total consolidated assets of USD 3 billion or more.

April 11, 2019 WebPage Regulatory News
News

OSFI Finalizes Guidelines on Liquidity Adequacy and NSFR Disclosures

OSFI published the final Liquidity Adequacy Requirements (LAR) guideline and the net stable funding ratio (NSFR) disclosure requirements guideline.

April 11, 2019 WebPage Regulatory News
RESULTS 1 - 10 OF 2920