On January 10, the FSB released for public consultation two papers: on practices for funding in resolution; and on internal financial and operational interconnectedness designed to facilitate effective resolution planning for insurers.
After convening with the Insurance Working Group (IWG), the IIF submitted its response to the FSB on March 14, 2022. The IIF response emphasized the importance of focusing on insurer recovery instead of resolution, and that resolution is both rare and idiosyncratic among insurers. In the event of resolution, the IIF noted the importance of using a resolution strategy that is proportional to the risks, if any, to financial stability posed by that insurer. When resolution is inevitable, resolution options should be evaluated holistically, with due consideration given to the full range of tools that are available. Further, coordination is needed among supervisors in the various jurisdictions in which the insurer operates in order to have an effective resolution strategy.
On the Internal Interconnectedness Paper, the IIF emphasized that insurers should have the flexibility to use existing risk management or reporting frameworks to map operational and financial interconnections.
The FSB will also host a workshop with stakeholders in Q2 2022 to discuss the questions raised in the two consultations. The IIF plans to attend the FSB session and raise the key points made in its consultation response.