1 July 2024news

GFIA responds to IAIS consultation

The Global Federation of Insurance Associations (GFIA) has responded to a consultation by the International Association of Insurance Supervisors (IAIS) on its holistic framework. 

The framework sets out IAIS’ insurance supervisory measures, including for macroprudential purposes, which seek to increase the industry's resilience to systematic risk.

In its response, GFIA argues that only when meeting established risk-based criteria and in proportionate manner should insurers be required to contribute to a supervisor’s resolution plan or submit a recovery plan. In addition, GFIA argues that Recovery and Resolution Planning (RRP) supervisory requirements should be coordinated across jurisdictions and not be duplicative or overlapping.

GFIA suggests that when preparing a resolution plan, the following points should be taken into consideration:

1. the unique characteristics of insurers

2. recognition of the existing jurisdictional supervisory approaches; and

3. only occur when an activities-based risk assessment, using clear criteria, indicates the need for a resolution plan.

GFIA highlights the importance of ensuring a 'proportionate application of the RRP' noting that overall, the chances of systemic risk were low, and the response should take into account the insurer's nature, scale, complexity and solvency position.

GFIA added that it further rejects the proposal to introduce RRP requirement for all Internationally Active Insurance Groups (IAIGs) and further rejects the need to specify minimum market coverage requirements for RRPs on a jurisdictional basis. The IAIS requirement should be limited to requiring jurisdictional authorities to have a process that considers the impact of each insurer's failure.

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