On November 9, the IAIS released for public consultation an Application Paper on Resolution Powers and Planning. The Application Paper is designed to provide guidance on supervisory practices related to resolution. In particular, the Paper provides guidance for the application of ICP 12 (Exit from the Market and Resolution) and is relevant to ICP 25 (Supervisory Cooperation and Coordination). After discussing responses to this consultation in a series of Insurance Working Group (IWG) calls, the IIF submitted its response to the IAIS on February 4, 2021.
The IIF stressed the importance of the IAIS taking an outcomes-based approach that considers both the rarity of an insurer’s sudden failure and the range of proactive recovery measures available that can help insurers avoid resolution. We encouraged the IAIS to focus on these options for recovery, as opposed to resolution, planning efforts, which have been used successfully in the insurance context to address entities in distress. In its response, the IIF emphasized the need for effective communication between the group supervisor, the crisis management group (CMG), relevant jurisdictional supervisors, and the management of the distressed company in order to ensure that any supervisory actions taken are appropriate, proportionate, and in the best interests of the company’s policyholders.
The IIF submitted its response to the IAIS on February 4, 2021.