Featured Product

    IAIS Supports Proposal on Sustainability Standards Board, Issues GIMAR

    December 17, 2020

    IAIS released a statement in support of the establishment of a Sustainability Standards Board as proposed in the September 2020 IFRS consultation on sustainability reporting. IAIS announced that it stands ready to support this initiative by providing its supervisory expertise. IAIS is also analyzing insurers' investment exposures to climate-relevant economic sectors, with the aim of assessing potential financial stability risks. In addition, IAIS published the global insurance market report, or GIMAR, for 2020. The report discusses the impact of COVID-19 shock on the global insurance sector from a supervisory perspective. High-level results indicate that, despite the considerable volatility in financial markets during the first half of the year, the global insurance sector remained financially and operationally resilient. This resilience was aided by supervisory measures for operational relief and by monetary and fiscal support measures to financial markets in certain regions.

    The global insurance market report shows that the most significant prudential impact on the insurance sector was with respect to solvency and profitability, primarily through losses on the asset side. Nevertheless, solvency ratios generally remained well above the jurisdictional requirements. On the liability side, the results vary greatly, depending on the business model. For instance, insurers involved in business lines like travel, event cancellation, business interruption, and pandemic or excess mortality insurance experienced a more significant impact whereas insurers with more diversified portfolios were affected to a lesser extent, as claims in other lines such as motor insurance decreased significantly due lower global economic activity. In terms of liquidity, the data suggest that the impact has been limited, raising no immediate concern on the ability of the insurance sector to fulfil obligations.

    However, vulnerabilities remain, given the uncertainties about the duration and impact of the COVID-19 crisis. Thus, IAIS will continue to actively monitor and assess how the insurance sector is affected, through targeted risk assessments involving insurers and supervisors across the globe. To monitor solvency and stability risks from a forward-looking perspective, IAIS is using its data collection to undertake further sensitivity analysis to assess insurance sector vulnerabilities based on various potential future scenarios. The sensitivity of insurers’ asset exposures to risk factors (such as credit loss rates) will be investigated in particular. Future monitoring will focus on key vulnerabilities, which may include:

    • The potential for a deterioration in the credit quality of insurers’ fixed-income portfolios, amid concerns about rating downgrades and solvency issues in the real economy. 
    • The impact of COVID-19 events on insurance claims, including uncertainty around the interpretation of policy wording in some business lines. 
    • The impact of the deepening of the low-yield environment on life insurers, particularly those writing long-term guaranteed products.

    The global insurance market report considered data collected as part of the IAIS’ global monitoring exercise as well as information from the IAIS members on their supervisory responses. The global monitoring exercise was repurposed in 2020 to assess the impact of COVID-19 shock on the solvency, profitability, liquidity, assets, and liabilities of the insurance sector. Individual insurers as well as insurance supervisors participated in the exercise, with 39 jurisdictions participating in the sector-wide monitoring data collection. 

     

    Keywords: International, Insurance, GIMAR, COVID-19, Sustainability Standards Board, Global Monitoring Exercise, Solvency Ratio, Solvency Capital Requirement, ESG, Climate Change Risk, IFRS, IAIS

    Featured Experts
    Related Articles
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699