GFIA has today published its response to a consultation conducted by the International Association of Insurance Supervisors (IAIS) on resolution powers and planning.
It is essential for the IAIS to recognise the differences between the banking and insurance business models and to therefore apply an approach that is proportionate to the relatively very low risk posed by insurers to financial stability.
When considering resolution powers and planning, it should also be recognised that the nature of insurance failures allows portfolios to be transferred and run-off over a long period of time, in contrast with bank failures. Therefore, a very different set of tools and level of intervention is usually required.
GFIA supports the application of the proportionality principle to provide needed flexibility and minimise burdens on both resolution authorities and insurers.