Today, the Financial Stability Board (FSB), in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, identified an initial list of nine global systemically important insurers (G-SIIs). These G-SIIs were identified using the IAIS assessment methodology. Going forward, the list of G-SIIs will be updated each year in November, starting in 2014.
Policy Measures Applicable to G-SIIs: Today, the IAIS also published a set of policy measures that will apply to G-SIIs and are consistent with the policy framework published by the FSB in November 2011. These policy measures include, for each G-SII:
1) Recovery and resolution planning requirements under the FSB’s Key Attributes of Effective Resolution Regimes, in particular:
- establishment of a Crisis Management Group (CMG);
- development of a recovery and resolution plan (RRP), including a liquidity risk management plan;
- carrying out within the CMG of resolvability assessments;
- development of institution-specific cross-border cooperation agreements among relevant resolution authorities.
2) Enhanced group-wide supervision, including:
- The group-wide supervisor having direct powers over holding companies.
- The group-wide supervisor overseeing the development and implementation of a Systemic Risk Management Plan.
3) Higher loss absorbency requirements (HLA) for non-traditional and noninsurance activities. In the absence of a global capital standard as a basis, these will be built upon straightforward, backstop capital requirements for all group activities, including non-insurance subsidiaries. HLA requirements will need to be met by the highest quality capital.
Timeline: The timelines for the further development and application of the policy measures for G-SIIs are as follows:
- Implementation of enhanced supervision, including group-wide supervision, commences immediately.
- CMGs should be established by July 2014.
- RRPs, including liquidity risk management plans, should be developed and agreed by CMGs by the end of 2014.
- As a foundation for HLA requirements for G-SIIs, the IAIS will as a first step develop straightforward, backstop capital requirements to apply to all group activities, including non-insurance subsidiaries, to be finalized by the time of the G20 Summit in 2014.
- Building on the above capital requirements, and following public consultation, the IAIS will develop by end-2015 implementation details for HLA requirements. These will apply starting from January 2019 to those G-SIIs identified in November 2017 using the IAIS methodology.
Financial Stability Board, List of Global Systemically Important Insurers (G-SIIs) (July 18, 2013) available here: http://www.financialstabilityboard.org/publications/r_130718.pdf
International Association of Insurance Supervisors, Global Systemically Important Insurers: Initial Assessment Methodology (July 18, 2013) available here: http://www.iaisweb.org/view/element_href.cfm?src=1/19151.pdf
International Association of Insurance Supervisors, Global Systemically Important Insurers: Policy Measures (July 18, 2013) available here: http://www.iaisweb.org/view/element_href.cfm?src=1/19150.pdf