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ABI attends International Association of Insurance Supervisors IAIS stakeholder meeting in Basel

On Tuesday 19th and Wednesday 20th January ABI representatives attended IAIS stakeholder meetings in Basel.  Two days of discussions were held to consider resolution and systemic risk.

The meetings were introduced by IAIS Secretary General, Yoshi Kawai, who gave an overview of the IAIS agenda. Over 2016 this will focus on the designation of globally systemically important insurers (G-SIIs) and on Non-Traditional Non-Insurance (NTNI) activities and products. In 2017, work will be concentrated on Global Capital Standards, notably the Basic Capital Requirements (BCR) and Higher Loss Absorbency (HLA).

The first meeting on the 19th began with a panel session on the Resolution of non-G-SII insurers in the context of the revision of ICP 12 (Winding-Up and Exit from the Market) and the development of ComFrame Module 3 Element 3 (Recovery and Resolution). The IAIS announced that consultations are to be held on ICP 12 and M3E3 in mid-2016. A second panel chaired by the Bank of England was held on loss-absorbing capacity (LAC) in resolution. As yet the IAIS has no formal requirements on LAC, which it distinguishes from total loss-absorbing capacity for Banks, and there will be further work on this in June. The ABI contributed its views on the need for portfolio transfer and run-off to be tools of first choice, the importance of taking into account the long-term nature of insurance resolution, and the need to consider Policyholder Protection Schemes alongside the resolution framework.

The meeting on the 20th featured panel sessions on G-SII methodology and NTNI, topics on which the IAIS recently consulted. The G-SII methodology incorporates 5 phases with a series of indicators, including NTNI. The 2016 designation of G-SIIs is likely to use this new methodology, incorporating the NTNI approach. The methodology will be reviewed in three years, where there will be scope to include further reference indicators. Regarding NTNI, the IAIS are seeking a clear framework which can be applied across other work streams. The focus is on two key vulnerabilities; ‘substantial’ market risk and ‘substantial’ liquidity risk.

For further information on the IAIS stakeholder meetings you can contact Alisa Dolgova or Ruth Shin.

Last updated 01/07/2016