Feedback Sought on Higher Loss Absorbency Requirement for Global Systemically Important Insurers; Additional Information Regarding Risk-Based Global Insurance Capital Standard Released

The International Association of Insurance Supervisors (“IAIS”) recently requested comments from the public as part of its effort to finalize development of the Higher Loss Absorbency (“HLA”) requirement for global systemically important insurers (“G-SIIs”). The HLA requirement, which stems from IAIS’ 2013 publication of its assessment methodology and policy measures for G-SIIs, seeks to reduce the risk of a G-SII failing or becoming distressed. As a basis for the HLA requirements, the IAIS released Basic Capital Requirements (“BCRs”) that apply to all group activities, including non-insurance activities, of G-SIIs. The HLA requirement will be delivered to the G20 for endorsement this November, though it will not apply to G-SIIs from 2019. Once the HLA is implemented, G-SIIs will be expected to hold qualifying regulatory capital that is no less than the sum of the required capital amounts identified in the BCRs and HLA. For more information on the HLA requirement and information on how to submit comments, please click here. Comments must be submitted by August 21.

Additionally, IAIS released additional information regarding the development of its risk-based global insurance capital standard (“ICS”), which will apply to internationally active insurance groups (“IAIGs”) as part of the IAIS’ common framework for the supervision of IAIGs (“ComFrame”). IAIS recently agreed on goals for its previously announced Version 1.0 (for confidential reporting) and Version 2.0 (for adoption within ComFrame) of the ICS. In order to allow field testing volunteers sufficient time to complete ongoing data requests and subsequent analyses, the IAIS adjusted the ComFrame and ICS delivery schedule. A document setting forth the ICS’ ultimate goal, interim goals, principles for development and delivery process is available on the Common Framework section of the IAIS website.