Key takeaways

• On 16 June 2016, the International Association of Insurance Supervisors (“IAIS”) released its updated assessment methodology for the designation of global systemically important insurers (“G-SIIs”).
• The revised methodology expands the designation process to five phases, including qualitative and quantitative analysis.
• Responding to comments from the industry, the revised methodology adopts absolute reference values for certain indicators, namely derivatives trading, financial guarantees and reinsurance.
• On 16 June, the IAIS also published a paper on insurance product features that increase an insurer’s potential to pose systemic risk, and discontinued the non-traditional, non-insurance product label.
• The changes bring the G-SII designation process more closely in line with the U.S. process for designating non-bank systemically important financial institutions.
• Ongoing changes to the assessment methodology create a level of uncertainty for large, global insurers and the strategic decisions they take now could have unintended consequences in the future.