Featured Product

    APRA Observations from Thematic Review on Recovery Plans of Insurers

    September 18, 2019

    APRA issued a letter to general insurers and life insurers, outlining observations from a recent thematic review on recovery planning by insurers. The attachment to the letter presents key observations of APRA, along with certain best-practice examples. APRA conducted this thematic review with a group of in-scope large and medium-size general insurers and life insurers, assessing their recovery plans against the recovery planning guidance provided to the in-scope insurers. APRA will use the outcomes of the thematic review to inform its development of a prudential framework for recovery and resolution, which will include a prudential standard and the accompanying guidance. APRA plans to consult on this framework next year.

    APRA observed that the recovery planning process has assisted in-scope insurers to advance their overall approach to risk management and to build a better understanding of the importance of recovery planning. However, considerable scope for improvement remains, before in-scope insurers can be assessed to have credible plans in place that are effectively integrated with the risk management framework. APRA considers usability of the recovery plan as a key factor in assessing its credibility. APRA expects recovery planning to be a dynamic process, wherein the plans continue to be assessed, tested, and improved with ongoing board oversight. The key observations include the following:

    • Governance. Robust governance arrangements are essential both for effectively developing and maintaining the recovery plan and for ensuring that appropriate monitoring and escalation processes are in place to allow for timely implementation of recovery options. This includes integration with risk management framework; monitoring, escalation, and activation processes; and operational testing.
    • Trigger frameworks. The trigger framework should operate in a manner that reflects the escalating nature of stress events, to facilitate timely contingency planning and the intensifying of responses as the severity increases. The areas of better practice are related to a range of metrics and timely trigger points.
    • Recovery options. The core element of a credible recovery plan is a comprehensive menu of realistic recovery options, supported by the requisite level of supporting analysis required to assess and implement the options. APRA lists areas of better practice with respect to menu of recovery options, valuations and assumptions of recovery options, and supporting analysis for recovery options.
    • Scenario analysis. The use of scenario analysis provides an important mechanism to help assess the credibility of the recovery plan, in particular the calibration of the trigger framework and feasibility of recovery options. The scenarios, therefore, need to be sufficiently severe to activate the recovery plan. 

     

    Related Link: APRA Letter (PDF)

     

    Keywords: Asia Pacific, Australia, Insurance, Recovery and Resolution, Thematic Review, Governance, Recovery Planning, APRA

    Related Articles
    News

    APRA Reviews Repayment Deferral Plans, Identifies Best Practices

    APRA has concluded its review of the comprehensive plans of authorized deposit-taking institutions for the assessment and management of loans with repayment deferrals.

    September 22, 2020 WebPage Regulatory News
    News

    ESAs Assess Risks to Financial Sector After COVID-19 Outbreak

    ESAs (EBA, EIOPA, and ESMA) published the first joint report that assesses risks in the financial sector since the outbreak of the COVID-19 pandemic.

    September 22, 2020 WebPage Regulatory News
    News

    BoE Confirms Withdrawal of COVID Corporate Financing Facility

    BoE and HM Treasury confirmed that the COVID Corporate Financing Facility (CCFF) will close for new purchases of commercial paper, with effect from March 23, 2021.

    September 22, 2020 WebPage Regulatory News
    News

    ECB Allows Temporary Relief in Leverage Ratio Amid COVID-19 Pandemic

    ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.

    September 21, 2020 WebPage Regulatory News
    News

    ESAs Launch Survey on Templates for Product Disclosures Under SFDR

    ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).

    September 21, 2020 WebPage Regulatory News
    News

    ECB Proposes Integrated Reporting Framework to Reduce Burden for Banks

    ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.

    September 21, 2020 WebPage Regulatory News
    News

    EC Deems UK Framework for CCPs Temporarily Equivalent to EMIR Rules

    EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).

    September 21, 2020 WebPage Regulatory News
    News

    EBA to Phase Out Guidelines on Loan Repayment Moratoria

    EBA has decided to phase out the guidelines on legislative and non-legislative moratoria of loan repayments, in accordance with the earlier specified end of September deadline.

    September 21, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5820