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May 2020

FSB endorses Higher Loss Absorbency (HLA) requirement for G-SIIs

Source: Asia Insurance Review | Nov 2015

The International Association of Insurance Supervisors (IAIS) has concluded initial development of the Higher Loss Absorbency (HLA) requirement for global systemically important insurers (G-SIIs) and the HLA has also been endorsed by the Financial Stability Board. This signals the completion of the second step in the IAIS’ initiative to develop group-wide global insurance capital standards. 
   Mr Felix Hufeld, Chair of the IAIS Executive Committee said in a statement: “With the initial development of the HLA and Basic Capital Requirements (BCR) now complete, the IAIS has met a major milestone in its commitment to address risks to the global financial system from systemically important insurers.”
   “As we have stressed before, the IAIS considers a sound capital and solvency framework for the insurance sector to be essential for supporting financial stability and we look forward to completing our next goal of developing ComFrame as a comprehensive, group-wide supervisory and regulatory framework for Internationally Active Insurance Groups (IAIGs),” he added.
   In July 2013, the IAIS published its initial assessment methodology and policy measures for G-SIIs. These policy measures include the HLA requirement, the primary purpose of which is to help reduce the probability and impact on the financial system of the distress or failure of a G-SII. The HLA will apply to G-SIIs from January 2019.
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