The Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector (Holistic Framework) was adopted by the IAIS in November 2019 and endorsed in December 2022 by the Financial Stability Board.
The Holistic Framework recognises that systemic risk may arise not only from the distress or disorderly failure of an individual insurer, but also from insurers’ collective exposures and activities at a sector-wide level.
It consists of an integrated set of macroprudential supervisory policy measures, a Global Monitoring Exercise and – as a key element – implementation assessment activities.
The TJA was carried out in 2021-2022 in 10 major insurance markets: Canada, China Hong Kong, China, France, Germany, Japan, the Netherlands, Switzerland, the United Kingdom and the United States.
The exercise included a desk-based assessment and an on-site component to ensure in-depth verification of described supervisory practices. It assessed Holistic Framework standards, in particular: requirements on macroprudential supervision, liquidity risk management and disclosures, supervisory powers of intervention, crisis management and planning, including recovery and resolution frameworks.
Almost all jurisdictions received an observance level of either “Observed” or “Largely Observed” for at least 70% of the standards. Overall, the number of standards that were “Partly Observed” is less than 15% for all jurisdictions and even below 5% for three jurisdictions.
While some gaps in implementation were identified for follow-up, there is continued progress on the implementation of the Holistic Framework standards in most jurisdictions assessed.
For example, in the area of recovery and resolution, the report formulates areas for follow-up for the short- and medium-term. The report also provides examples, which serve to illustrate implementation practices observed during the assessment.
