The International Association of Insurance Supervisors (IAIS) released a supervisory guidance paper on risk transfer, disclosure and analysis of finite reinsurance. The purpose of this paper is to provide supervisors with information to aid in the evaluation of finite reinsurance from the perspective of the ceding insurer. From a supervisory perspective, the issues around finite reinsurance are important because of the credit or allowance for reinsurance that may be permitted within a jurisdiction’s solvency regime.
The paper contains guidance regarding the supervision of finite reinsurance that is supported by a number of existing IAIS principles on insurance supervision. Recent developments in the area of finite reinsurance by various regulatory agencies have highlighted the concern that this form of reinsurance has been used improperly on occasion. The paper outlines the background on the development of finite reinsurance and the uses of this product by insurers. The paper then turns to the issues in finite reinsurance that supervisors should be aware of and identifies the various supervisory approaches taken to address these issues.
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© IAIS - International Association of Insurance Supervisors
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