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IAIS consults on loss requirements for major players

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The International Association of Insurance Supervisors (IAIS) has started consultation on higher loss absorbency requirements for global systemically important insurers.

The requirements’ main aim is to reduce the probability and impact on the financial system of a systemically important insurer’s distress or failure.

Last October the IAIS developed basic capital requirements for all group activities, including non-insurance activities, in systemically important insurers.

When it implements the requirements, such insurers will be expected to hold qualifying regulatory capital that is no less than the sum of required capital amounts under basic capital and higher loss absorbency requirements.

The IAIS says consultation on this higher loss requirement is not about specific formulas, but the structure designed to address key objectives of risk sensitivity, robustness and simplicity.

Feedback is open until August 21.

The final loss requirement will be delivered to the G20 meeting in Turkey in November, and will apply to systemically important insurers from 2019.