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Clifford Chance

Clifford Chance

Briefings

Global Systemically Important Insurers – who are they and what will it mean to be a GSII?

30 July 2013

The International Association of Insurance Supervisors (IAIS) has released its assessment methodology and policy measures for global systemically important insurers (GSIIs) as well as an overall framework for macroprudential policy and surveillance.

GSIIs are a class of global systemically important financial institutions (SIFIs) with the latter being defined by the Financial Stability Board (FSB) as "institutions of such size, market importance, and global interconnectedness that their distress or failure would cause dislocation in the global financial system and adverse economic consequences across a range of countries". On 18 July 2013, the IAIS released its assessment methodology and policy measures for GSIIs as well as an overall framework for macroprudential policy and surveillance. In this briefing we summarise the methodology and measures as well as the proposed timeline.


The FSB, in consultation with the IAIS and national authorities, has also released an initial list of 9 GSIIs, namely Allianz SE, American International Group, Inc., Assicurazioni Generali S.p.A., Aviva plc, Axa S.A., MetLife, Inc., Ping An Insurance (Group) Company of China, Ltd., Prudential Financial, Inc. and Prudential plc. These GSIIs have been identified using the assessment methodology produced by the IAIS.


After 2013, GSIIs will be designated on an annual basis each November in order to align the designation timetable with that of banking industry SIFIs. As part of this annual review process, existing GSIIs may be removed from the list should they no longer satisfy the relevant assessment criteria.


Insurance Europe, representing insurance associations in the EU, has criticised a system which leads to the identification of individual insurers rather than specific activities that might pose systemic risk. The Chair of the Global Federation of Insurance Associations has expressed disappointment that the starting point for both the measures and methodology to assess systematic risk in insurance was the work done to address systemic risk in the banking industry when the nature of the assets and liabilities of insurers is very different from that of banks.

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