Global standards for insurer resolution frameworks

International standards for insurer resolution are primarily set by the Financial Stability Board (FSB) and the International Association of Insurance Supervisors (IAIS).

The FSB's Key Attributes of Effective Resolution Regimes apply to systemically important financial institutions, including insurers.

These 12 Key Attributes define core elements such as resolution objectives, powers, safeguards, planning, and cross-border coordination.

The IAIS Insurance Core Principles (ICPs) govern the supervision of all insurers, with ICP 12 detailing measures for market exit and resolution.

The Common Framework (ComFrame) extends these provisions to internationally active insurance groups (IAIGs).

Resolution aims to preserve financial stability by ensuring the continuity of a failed institution's critical functions and protecting policyholders, beneficiaries, and claimants.

This protection is typically achieved through continuous insurance coverage.

Shareholders and unsecured creditors absorb losses according to the hierarchy of claims, meaning policyholders may not be fully protected.

Resolution frameworks provide authorities with powers for orderly insurer management, including control, restructuring (transfer, bail-in), and suspending third-party actions like policyholder withdrawals to ensure stability.

Authorities can also initiate run-off or liquidation.

These powers are explicit, override shareholder/creditor rights, and are subject to 'no creditor worse off' (NCWO) safeguards.

Resolution planning is a crucial preparatory step, requiring firm-specific or group-wide plans for systemically significant insurers, regularly reviewed for resolvability.

For multi-jurisdictional insurers, cross-border coordination is vital, facilitated by cooperative arrangements and Crisis Management Groups (CMGs) for information-sharing and synchronized actions.