The International Association of Insurance Supervisors (IAIS) has released two publications, marking the completion of its multi-year cycle of assessing implementation of the supervisory material of the Holistic Framework for systemic risk in the insurance sector. South Africa is among the markets assessed.
The first publication, titled "Report on the second Targeted Jurisdictional Assessment (TJA) of the implementation of the Holistic Framework supervisory material", states that the IAIS evaluated six new jurisdictions supervising 10 Internationally Active Insurance Groups (IAIGs). The six markets are Australia, Bermuda, Italy, Singapore, South Africa and Spain.
This assessment covered 23 Insurance Core Principles (ICPs) and Common Framework for the Supervision of IAIGs (ComFrame) standards across three thematic areas: (1) IAIG determination and macroprudential supervision; (2) liquidity risk management and disclosure; and (3) crisis management, recovery planning and resolution frameworks.
The aggregate results highlight significant progress in the implementation of Holistic Framework standards across the six jurisdictions, with notable strengths observed in IAIG determination, macroprudential supervision and recovery planning. Nonetheless, some gaps remain in specific areas, particularly in resolution planning, resolution powers and supervisory practices for liquidity risk management.
This followed an original assessment of 10 major insurance markets in 2022.
The IAIS also provided an update on progress made by these 10 original jurisdictions in addressing implementation gaps identified in the 2022 TJA. The 10 include Canada; China; Hong Kong; France; Germany; Japan; the Netherlands; Switzerland; the United Kingdom and the United States.
The two reports, covering 16 major insurance markets, provide a comprehensive picture of the global insurance sector’s progress in systemic risk mitigation, particularly in macroprudential supervision and international crisis management, while identifying areas for improvement, including resolution and liquidity risk disclosure.
The findings reaffirmed the importance of the Holistic Framework in strengthening global financial stability of the insurance sector.
Targeted Jurisdictional Assessments (TJA) and progress monitoring
The phased implementation assessment of the Holistic Framework supervisory material, through baseline assessments, TJA and progress monitoring, provides a comprehensive picture of supervisors’ efforts to strengthen the insurance sector’s resilience to systemic risk in major insurance markets.
IAIS Executive Committee Chair Toshiyuki Miyoshi said, “The progress made by jurisdictions to strengthen resilience to systemic risk demonstrates a commitment to fostering global financial stability. The IAIS remains dedicated to supporting jurisdictions in closing the gaps identified in the reports and continuing to strengthen the resilience of the insurance sector.”
While notable progress has been made, there are a few gaps in the areas of resolution powers, resolution planning, and liquidity risk disclosures. Jurisdictions are actively undertaking initiatives to address these gaps.
“The Holistic Framework implementation assessments represent a concerted effort by the IAIS and its members to enhance the global insurance sector’s resilience to systemic risk,” said IAIS Secretary General Jonathan Dixon.
“These assessments not only help strengthen financial stability worldwide through promoting comprehensive and consistent implementation of the IAIS’ standards on systemic risk but also provide an important feedback loop on how these standards may need to be further enhanced or where further supervisory guidance may be necessary.”
Mr Dixon added, “The success of this exercise provides a strong foundation for future assessments of other IAIS standards, such as the Common Framework for the Supervision of IAIGs, including the Insurance Capital Standard.”
The 2025 TJA report can be accessed here, and the progress monitoring report of the 2022 TJA can be accessed here.