FSB welcomed the finalization of the IAIS holistic framework for systemic risk in the insurance sector, for implementation in 2020. FSB also published remarks by the FSB Chair Randal K. Quarles, on Supervision in a Digital Era, at the Annual Conference of IAIS. Additionally, EIOPA welcomed the adoption of ComFrame, Insurance Capital Standard (ICS) Version 2.0, and the holistic framework for the assessment and mitigation of systemic risk in the insurance sector. However, OSFI notified that it did not support the ICS design proposed for a five-year monitoring period at the Executive Committee Meeting of IAIS.
OSFI notes that the standard in its current form is not fit for purpose for the Canadian market. Specifically, the proposed capital requirements for long-term products are too high to be compatible with the OSFI mandate of allowing Canadian insurers to compete and take reasonable risks. OSFI highlighted that,during the five-year monitoring period, OSFI will continue its work in trying to achieve an ICS for insurance companies that works for all jurisdictions. Canadian insurers will continue to be subject to the requirements of the robust OSFI capital frameworks for federally regulated insurance companies.
In light of the finalized holistic framework, FSB, in consultation with IAIS and national authorities, has decided to suspend Global Systemically Important Insurers (G-SII) identification from the beginning of 2020. 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 by FSB in consultation with IAIS and national authorities. FSB will receive from IAIS an annual update of the outcomes of the global monitoring exercise, including the IAIS assessment of systemic risk in the global insurance sector and the supervisory response to identified risks.
Keywords: International, Europe, Americas, EU, Canada, Insurance, Reinsurance, ICS Version 2.0, ComFrame, G-SII, Systemic Risk, IAIS, EIOPA, OSFI, FSB
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