Insurance Europe against new ancillary liquidity indicators as part of IIM methodology

Written by Adam Cadle

08/02/2023

Insurance Europe has declared its lack of support concerning the IAIS’ decision to introduce five new ancillary liquidity indicators as part of its Individual Insurer Monitoring (IIM) assessment methodology.

The IIM is aimed at assessing systemic risk stemming from an individual insurer’s distress or disorderly failure, recognising that potentially systemic activities or exposures may become concentrated in an individual insurer, such that its distress or disorderly failure would pose a serious threat to global financial stability. The IAIS said it can make use of ancillary risk indicators in its analysis, stating they “may provide additional context that can inform the overall assessment”.

Insurance Europe argued, however, that the use of multiple indicators and time horizons is “considered to be unnecessary” given the low level of macroprudential liquidity risk in the insurance sector.

It added that it does not support the development of further ancillary indicators for reinsurance or credit risks. “The need to develop such indicators does not appear to be substantiated by empirical evidence of macroprudential risks in the insurance sector.”

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