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Home Enhanced Prudential Standards Financial Stability Board Identifies Global Systemically Important Insurers (G-SIIs) and Policy Measures that Will Apply to G-SIIs

Financial Stability Board Identifies Global Systemically Important Insurers (G-SIIs) and Policy Measures that Will Apply to G-SIIs

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.

Materials: 

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

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