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. For more information on the Holistic Framework and its key elements, please visit our Financial Stability page. 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.

The Holistic Framework implementation assessment activities are aimed at promoting globally consistent and effective implementation of the relevant supervisory material. This is critical for supporting financial stability, since the potential build-up of systemic risk may be global in nature, so should be the application of policy measures aimed at assessing and mitigating systemic risks. The policy measures are designed to help prevent insurance sector vulnerabilities and exposures from developing into systemic risk in the first place. For this to be effective in practice, it is important that the policy measures are implemented consistently and effectively and applied to a broader portion of the global insurance sector.

The Holistic Framework 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 is being conducted as so-called Targeted Jurisdictional Assessments (TJAs) carried out in 2021-2022. These are more intensive and include 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 TJAs follow the Member Assessment Programme approach.

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 (TJAs)

The assessments are 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  planning and powers of intervention / preventive and corrective measures

The TJA aggregate report will be available in the first half of 2023.

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