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Today, the International Association of Insurance Supervisors (IAIS) published liquidity metrics as an ancillary indicator for its Global Monitoring Exercise (GME).
The liquidity metrics will serve as a tool to facilitate the IAIS’ monitoring of the global insurance sector’s liquidity risk and for the IAIS to assess insurers’ liquidity exposure from a macroprudential perspective, which may be critical as insurers have been exposed to liquidity shortfalls in previous crises.
The liquidity metrics form one part of the IAIS’ overall approach to the assessment and mitigation of liquidity risk in the insurance sector.
The new ancillary indicator will provide an additional perspective on liquidity risk within the GME but is not intended to replace any current indicator of the IIM methodology. Because of the complexity of monitoring liquidity risk of insurance groups based on any single indicator and the inherent limitations of any single approach given the many dimensions of liquidity risk to consider, the IAIS has developed multiple liquidity metrics for use in the IIM.
The metrics were developed as part of a multi-year project, which has benefited from two public consultations and intensive testing through the IIM data collections. In addition to the document describing the liquidity metrics, the IAIS has published the resolution of comments received in the public consultation on Liquidity Metrics – Phase 2. The IAIS will continue to assess and refine the liquidity metrics going forward.
A virtual public background session including information on the liquidity metrics will be held on 10 January 2023, 13:00-15:00 CET. Click here to register.
Document links: