On April 10, the IIF submitted its response to the IAIS’s draft Issues Paper on the roles and functioning of Policyholder Protection Schemes (PPS). The IAIS Issues Paper was developed as a follow up to the 2013 version and builds on subsequent developments such as the adoption of the revised set of Insurance Core Principles (ICPs) and the Common Framework for the Supervision of Internationally Active Insurance Groups in November 2019.

The IIF response put forward several suggestions for better balancing the regulatory and political considerations that are inherent in developing PPS. These include allowing for flexibility in the design and implementation of the PPS, reflecting jurisdictional specificities; providing a more nuanced discussion of the role moral hazard may have in PPS; and encouraging ex-post funding is over ex-ante funding or policyholder surcharges. The response letter also noted the need for jurisdictions to provide clear de-lineation of the respective roles and responsibilities of supervisors, resolution authorities and authorities responsible for PPS, and that actions taken by the authorities should be clearly communicated to the insurer to ensure that those actions are appropriate, effective, and support the goal of restoring the in-surer to viability.