Amid efforts to address systemic risk by global insurance regulators, the Financial Stability Board (FSB) says that it won’t be singling out the insurers that it considers to be systemically important this year.
The Financial Stability Board welcomed the publication Wednesday of the International Association of Insurance Supervisors (IAIS) consultation paper on a proposed holistic framework for the assessment and mitigation of systemic risk in the insurance sector.
The paper sets out a proposed framework that includes an approach to sector-wide risk monitoring and management and tools for dealing with the build-up of risk within individual insurers. The IAIS is aiming to finalize the framework in 2019, and to implement it in 2020.
“The publication of this consultation document is a significant step forward in the IAIS’ contribution to broader financial stability. Appropriately implemented, this holistic framework will provide an enhanced basis for mitigating systemic risk in the insurance sector,” says Victoria Saporta, chairwoman of the IAIS executive committee, in a statement.
In light of the progress with the proposed framework, the FSB has “decided not to engage in an identification of global systemically important insurers (GSIIs) in 2018,” the board says in a news release.
Once the IAIS framework is finalized, the FSB will consider the IAIS’s recommendation to suspend G-SII identification from 2020. In November 2022, the FSB will 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.”
Comments on the IAIS consultation are due by Jan. 25 2019.