The Financial Stability Board (FSB) today released Developing Effective Resolution Strategies and Plans for Systemically Important Insurers (‘Guidance’), which provides guidance on developing effective resolution strategies and plans for systemically important insurers. The Guidance should assist authorities in meeting the resolution planning requirement under the Key Attributes of Effective Resolution Regimes for Financial Institutions (Key Attributes) and support Crisis Management Groups (CMGs) of global systemically important insurers (G-SIIs) in their resolution planning work.
The Guidance was issued for public consultation in November 2015 and has been revised in light of the comments received during the consultation. It sets out considerations for determining a preferred resolution strategy based on a strategic analysis of insurers’ business models, the criticality of insurers’ functions and policy holder protection arrangements. It also identifies a range of elements that need to be in place so that a resolution strategy can be credibly and feasibly be implemented, including effective cross-border cooperation, information systems and resources to absorb loss.
The Guidance has been developed with the participation of the International Association of Insurance Supervisors (IAIS) and builds on the implementation guidance published by the FSB in October 2014 on how provisions of the Key Attributes, including resolution powers and the details of recovery and resolution planning, should be interpreted for insurers. The Guidance also incorporates elements from a separate consultation on critical insurance functions and the responses received from the public consultation of October 2014.
Patrick Montagner, Chair of the FSB Cross-border Crisis Management Group for Insurers, and Deputy Secretary General of the French Autorité de Contrôle Prudentiel et de Résolution (ACPR) welcomed the publication of the Guidance noting that “the Guidance recognises that insures are fundamentally different from banks, but resolution planning is important for all systemically important financial institutions, including insurers. 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.”
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