IA Publishes Guideline on Enterprise Risk Management for Insurers
IA of Hong Kong published the guideline GL-21 on enterprise risk management, or ERM, for insurers. The guideline sets out the objectives and requirements on ERM and the Own Risk and Solvency Assessment (ORSA), in addition to providing the impetus for insurers to establish effective tools to identify, monitor, manage, and mitigate risks. GL-21 shall take effect from January 01, 2020. Additionally, to monitor the overall progress of the industry in enhancing their ERM frameworks of insurers, IA is conducting a Preparation Status Survey that insurers are expected to complete on the best effort basis. Insurers are requested to complete the survey in Excel file format and have it returned to IA by August 16, 2019.
The main objective of the guideline GL-21 is to nurture a sound risk culture in the insurance industry that should be reflected in the values, attitudes, and norms of business behavior. The guideline sets out the requirements for Pillar 2 of the risk-based capital regime in Hong Kong and provides the impetus for authorized insurers to:
- Put in place a robust system of risk governance
- Proactively identify and assess their risk exposure
- Maintain sufficient capital to cover risks not captured or not adequately captured under Pillar 1
- Develop and enhance risk management techniques in monitoring and managing these risk exposures
IA has finalized the guideline on ERM, post two consultations—one consultation was conducted in May 2018 while the second was conducted in January 2019. IA issues GL-21 pursuant to section 133 of the Insurance Ordinance (Cap. 41) and its principal function is to regulate and supervise the insurance industry for the protection of existing and potential policy holders. This guideline takes into account the relevant Insurance Core Principles (ICPs), standards, guidance, and assessment methodology promulgated by IAIS. This guideline is part of the Pillar 2 of the risk-based capital regime for the insurance industry in Hong Kong. The risk-based capital regime in Hong Kong comprises three pillars: Pillar 1 covers the regulatory capital rules and requirements, Pillar 2 covers corporate governance and ERM, and Pillar 3 covers reporting and disclosure requirements.
Related Links
Effective Date: January 01, 2020
Keywords: Asia Pacific, Hong Kong, Insurance, ERM, ORSA, Regulatory Capital, Pillar 2, ICP, Risk-Based Capital Regime, IA
Previous Article
FDIC Allows Early Adoption of Capital Simplifications Final RuleRelated Articles
APRA Issues Interim Update to Policy Priorities for 2021 and Beyond
In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.
EC Adopts Solvency II and Resolution Rules Package for Insurers
The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.
OCC Issues Booklets on Regulatory Reporting and Earnings
The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.
ECB Sets Out Results of Economy-Wide Climate Stress Tests
The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.
EBA Examines Implications of Increasing Use of Digital Platforms in EU
The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.
HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact
The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.
ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures
The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.
BIS Quarterly Review Discusses Developments in Fintech and ESG Space
BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.
BCBS to Consult on Supervisory Practices for Climate Risks by Year-End
The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards
OCC Identifies Operational Risk Deficiencies in MUFG Union Bank
The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.
