Holistic Framework implementation assessment
The IAIS adopted the Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector in November 2019, for implementation from the beginning of 2020. In December 2022, the Financial Stability Board endorsed the Holistic Framework and discontinued the identification of Global Systemically Important Insurers (G-SIIs).
A key element of the Holistic Framework is the assessment by the IAIS of the consistent implementation of the relevant supervisory material: enhanced ongoing supervisory policy measures and powers of intervention. These supervisory materials are integrated into the Insurance Core Principles (ICPs) and the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) by enhancing or adding supervisory policy measures specifically designed to assess and mitigate potential systemic risk building up in the insurance sector. For more information on the Holistic Framework and its key elements, please visit our Financial Stability page.
The Holistic Framework implementation assessment activities are aimed at promoting globally consistent and effective implementation of the relevant supervisory material. These activities are designed to promote financial stability by addressing potential systemic risks on a global scale. By applying policy measures consistently and effectively, the aim is to prevent vulnerabilities and exposures in the insurance sector from developing into systemic risks.
The Holistic Framework implementation assessments were undertaken and split into two phases: The first phase of implementation assessment, the Baseline Assessment (BLA), was carried out in 2020-2021. The second phase of implementation assessment for the Holistic Framework was conducted as so-called Targeted Jurisdictional Assessments (TJA) carried out in 2021-2022. These were more intensive and included a desk-based review and on-site component to ensure an in-depth verification of described supervisory practices. Whilst the BLA was carried out rather similar to a Peer Review Process, the TJA followed the Member Assessment Programme approach.
Stakeholder Engagement
In April 2023, the IAIS published a report assessing implementation of the Holistic Framework insurance standards in ten major markets. The report summarised the outcomes of the assessment of the implementation of standards that form part of the IAIS Holistic Framework for the assessment and mitigation of systemic risk in the insurance sector (Holistic Framework) across ten major insurance markets. Robust implementation assessment is also a key pillar of the Holistic Framework aimed at supporting financial stability at the global level. In addition, the in-depth targeted jurisdictional assessment (TJA) showed an overall consistent and strong implementation of the Holistic Framework standards, indicating enhanced macroprudential supervisory practices in the insurance sector.
Baseline Assessment (BLA)
The Baseline Assessment determined the extent to which supervisors have already implemented the Holistic Framework supervisory material, effectively establishing a baseline level of implementation. Assessment tools include a self-assessment questionnaire, an expert review and a supervisor-issued report on plans to address any implementation gaps. The BLA aggregate report was published in June 2021.
Targeted Jurisdictional Assessments (TJA)
The assessments were divided into three cycles, relevant to thematic areas to achieve the objectives of the Holistic Framework.
• Cycle 1: Role of the supervisor including group-wide supervision and macroprudential supervision.
• Cycle 2: Requirements on insurers in relation to corporate governance and enterprise risk management (ERM) including investment policy.
• Cycle 3: Crisis management and planning and powers of intervention / preventive and corrective measures.
In April 2023, the IAIS published its public report reflecting the findings from the TJA performed during 2021-2022. The report highlighted robust implementation of the Holistic Framework standards, with good levels of observance across many of the standards. In most jurisdictions where there were gaps, continued progress was being made on implementation.
As a follow-up, in early 2023, the IAIS initiated progress monitoring of the implementation of the Holistic Framework supervisory material in those 10 jurisdictions, particularly where gaps had been identified through the TJA.
Monitoring has demonstrated that the majority of gaps have been addressed through legislative amendments and the adoption of new supervisory expectations and practices. While significant progress has been made, a few identified gaps still require attention and will continue to be monitored.
Holistic Framework implementation assessment activities in 2024 will cover six additional jurisdictions.