Even if the call to shift to an activities-based approach to gauging systemic risk in the insurance sector intensifies, Yoshihiro Kawai, secretary-general of the International Association of Insurance Supervisors (IAIS), says that the system of designating individual firms as global systemically important insurers (G-SII) will remain.
“There was a question as to whether the activities approach with either be complementary or a replacement,” Kawai said in a speech at the National Association of Insurance Commissioners’ international insurance forum in Washington, DC on Tuesday.
“Our position is that they coexist. Identifying systemic risk in an entities-based approach is still very legitimate.”
In 2016, the Financial Stability Board requested the IAIS work towards adopting an activities-based approach to systemic risk that would precisely identify which actions insurers take that could be considered systemically risky.
Earlier, Kawai said that the IAIS will launch a consultation regarding the activities-based approach in the second half of 2017, with a final implementation paper coming out a year later.
Meanwhile, Julian Adams, head of government relations at UK mega-insurer Prudential, which is classified as a G-SII, said that he hopes the activities-based approach would eventually supplant the previous entities approach in order to avoid regulators “double-counting” risks.
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