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

    EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation

    The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).

    May 23, 2022 WebPage Regulatory News
    News

    EBA Publishes Regulatory Standards to Identify Shadow Banking Entities

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.

    May 23, 2022 WebPage Regulatory News
    News

    EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance

    The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks

    May 20, 2022 WebPage Regulatory News
    News

    EC Publishes Results on Review of Web Accessibility Directive

    The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.

    May 19, 2022 WebPage Regulatory News
    News

    NGFS Report Explores Quantification of Climate Risk Differentials

    The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations

    May 19, 2022 WebPage Regulatory News
    News

    MAS Consults on Adjustment Spreads for Conversion of SOR Contracts

    The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.

    May 18, 2022 WebPage Regulatory News
    News

    OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities

    The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.

    May 17, 2022 WebPage Regulatory News
    News

    EBA Proposes Standards to Support Secondary NPL Markets

    The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.

    May 17, 2022 WebPage Regulatory News
    News

    EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution

    The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).

    May 13, 2022 WebPage Regulatory News
    News

    EBA Issues Standards for Crowdfunding Service Providers Under ECSPR

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.

    May 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8206