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No new global systemically important insurers (G-SIIs) for 2017: FSB

21st November 2017 - Author: Steve Evans

The Financial Stability Board (FSB) has decided not to publish a new list of globally systemically important insurers (G-SIIs) for 2017, saying that it welcomes work being undertaken to develop an Activities-Based Approach to systemic risk.

Financial Stability Board logoThe decision not to publish any update to the G-SII list has been taken following consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, the FSB said.

The first list of G-SIIs was published in 2016, naming Aegon N.V., Allianz SE, American International Group, Inc., Aviva plc, Axa S.A., MetLife, Inc., Ping An Insurance (Group) Company of China, Ltd., Prudential Financial, Inc. and Prudential plc as being systemically important.

The FSB said that while no update was being made for 2017, the policy measures regarding the higher loss absorbency (HLA) standard will continue to apply to the insurers designated as G-SII in the 2016 list.

It also said that it welcomes and encourages the IAIS’ work to develop an Activities-Based Approach to systemic risk in the insurance sector, work that we discussed in a recent article here.

The FSB said that an Activities-Based Approach could have significant implications for the assessing systemic risk of re/insurers and hence for the identification of G-SIIs and for future G-SII policy measures.

The organisation plans to review the G-SII situation in November 2018, based on the progress that has been made in developing the Activities-Based Approach.

The IAIS will continue to collect relevant data on re/insurers for the G-SII identification process and support the development of the Activities-Based Approach to systemic risk in the insurance sector, as the regulators seek to enhance the G-SII assessment methodology.

So the nine systemically important insurers will remain designated as such for the next year, while the regulators work to shift towards the activity based designation.

The insurance and reinsurance sector much prefers the prospect of being judged how systemically important it is based on the activities it undertakes, rather than its size alone.

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