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Ref no: 40/2019

The Financial Stability Board (FSB) today welcomed the finalisation and publication of the International Association of Insurance Supervisors’ (IAIS) Holistic Framework for Systemic Risk in the Insurance Sector, for implementation in 2020. 

The key elements of the framework are:

  • An enhanced set of supervisory policy measures for macroprudential purposes, designed to increase the overall resilience of the insurance sector and help prevent insurance sector vulnerabilities and exposures from developing into systemic risk, through ongoing supervisory requirements applied to insurers, enhanced macroprudential supervision and crisis management and planning; and where a potential systemic risk is detected, supervisory powers of intervention that enable a prompt and appropriate response. Supervisors are required to have at their disposal a sufficiently broad set of preventive and corrective measures to be able to respond appropriately based on the nature of the macroprudential concern.

  • A global monitoring exercise by the IAIS designed to assess global insurance market trends and developments and detect the possible build-up of systemic risk in the global insurance sector. This includes an annual assessment by the IAIS of potential systemic risk arising from sector-wide trends with regard to specific activities and exposures, but also the possible concentration of systemic risks at an individual insurer level (using an updated assessment methodology) arising from these activities and exposures.

  • Mechanisms to allow for a collective assessment of potential global systemic risk and a coordinated supervisory response when needed. This involves, at an individual insurer and sector-wide level: i) A collective discussion by the IAIS of the assessment of potential systemic risks and appropriate supervisory responses; and ii) Reporting to the FSB on the outcomes of the global monitoring exercise, including the IAIS assessment of global systemic risk and the supervisory response to identified risks (if any).

  • An assessment by the IAIS of the consistent implementation of the enhanced supervisory policy measures and powers of intervention.

In light of the finalised holistic framework, the FSB, in consultation with the IAIS and national authorities, has decided to suspend Global Systemically Important Insurers (G-SII) identification as from the beginning of 2020.

In November 2022, the FSB will, based on the initial years of implementation of the holistic framework, review the need to either discontinue or re-establish an annual identification of G-SIIs by the FSB in consultation with the IAIS and national authorities.

The FSB will receive from the IAIS an annual update of the outcomes of the global monitoring exercise, including the IAIS assessment of systemic risk in the global insurance sector and the supervisory response to identified risks (if any). The IAIS will continue its annual data collection from individual insurers, complemented by data collection from supervisors to support its assessment of sector-wide trends with regard to specific activities and exposures.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Governor and Vice Chairman for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.