IAIS Consults on Guidance on Liquidity Risk Management for Insurers
IAIS is seeking feedback on the draft application paper on liquidity risk management for insurers. As part of the holistic framework for systemic risk in the insurance sector, IAIS enhanced the enterprise risk management requirements in ICP 16 to more explicitly address liquidity risk. The paper provides guidance on supervisory material related to liquidity risk management in the Insurance Core Principles (ICPs) and ComFrame. The guidance relates to the material in ICP standards 16.8 and 16.9 (ICP 16 on enterprise risk management, for solvency purposes) and ComFrame 16.9.a–16.9.d. The comment period for the application paper on liquidity risk management ends on January 20, 2020.
The key topics covered in the paper include governance, liquidity stress testing, liquidity portfolio, contingency funding plan, and liquidity risk management report. The paper includes guidance and examples on the following:
- Considerations on the proportional application of liquidity risk management measures and the ways that supervisors may tailor requirements.
- Detailed components of the four elements for “more detailed risk management processes” in ICP standard 16.9: liquidity stress testing, maintenance of a portfolio of unencumbered highly liquid assets, a contingency funding plan, and the submission of a liquidity risk management report to the supervisor.
- Integration of liquidity risk into the enterprise risk management framework for insurers, as described in ICP Standard 16.8, including recommendations for governance.
The application paper should be read in the context of the proportionality principle, which acknowledges the flexibility among supervisors to tailor the application of supervisory requirements and supervision to achieve the outcomes stipulated in the principle statements and standards. Application papers provide additional material related to one or more ICPs, ComFrame, or global systemically important insurer policy measures, including examples or case studies that help in the practical application of supervisory material.
Comment Due Date: January 20, 2020
Keywords: International, Insurance, ICP 16, ComFrame, Proportionality, Stress Testing, Governance, Liquidity Risk, Enterprise Risk Management, IAIS
Featured Experts
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Laurent Birade
Advises U.S. and Canadian financial institutions on risk and finance integration, CCAR/DFAST stress testing, IFRS9 and CECL credit loss reserving, and credit risk practices.
Emil Lopez
Credit risk modeling advisor; IFRS 9 researcher; data quality and risk reporting manager
Previous Article
EBA Issues Revised List of Validation Rules for Reporting by BanksRelated Articles
EBA Launches Stress Tests for Banks, Issues Other Updates
The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.
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.
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.
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.
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.
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.
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.
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.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
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.
