The Financial Stability Board (FSB) released new guidance on Monday on developing effective resolution strategies and plans for insurers that are deemed “systemically important.”
The guidance, which is aimed at helping regulators and insurers with resolution planning, sets out factors for firms to consider in devising an effective resolution strategy and the elements that are required so a strategy can be implemented, including effective cross-border co-operation, information systems and resources to absorb losses.
“The guidance recognizes that insures are fundamentally different from banks, but resolution planning is important for all systemically important financial institutions, including insurers,” says Patrick Montagner, chairman of the FSB cross-border crisis management group for insurers and deputy secretary general of the French Autorité de Contrôle Prudentiel et de Résolution, in a statement.
“This guidance, if effectively applied, will greatly improve authorities’ preparedness to manage and resolve a crisis affecting a systemic insurers should this ever become necessary,” he adds.
The FSB publishes an annual list of insurers that are deemed systemically important based on various criteria. The list is updated each November based on new data.