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

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News

    EC Adopts Final Rules Under CRR, BRRD, and Crowdfunding Regulation

    The European Commission (EC) recently adopted regulations with respect to the calculation of own funds requirements for market risk, the prudential treatment of global systemically important institutions (G-SIIs)

    October 26, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8582