Resolution Funding for Insurers: Practices Paper
Resolution funding arrangements are essential to facilitate the effective and timely implementation of resolution measures.
This Paper discusses the different sources of resolution funding, including policyholder protection schemes and standalone resolution funds, and how they interact with each other when both exist.
It starts by looking at liquidity facilities available to insurers on a business-as-usual basis for them to manage their liquidity needs and presents examples of emergency liquidity assistance facilities that may be available to insurers. The Paper also discusses temporary funding sources for resolution funds and describes mechanisms in place to recover funds used in resolution.
This Paper is relevant for supervisory authorities or resolution authorities of any insurer that could be systemic or critical if it fails. Policy makers and resolution authorities may use the Paper as a reference as they develop their resolution funding framework for insurance companies.
The FSB invites feedback on its practices paper on resolution funding for insurers. The submitted views would help inform FSB’s further reflections. In particular, the FSB invites feedback from stakeholders on the following:
What further consequences or challenges to the determination and mobilisation of internal or external funding should be considered in addition to those identified in the paper? What preparations could be taken to ensure availability of these funding sources in resolution, nevertheless? Are there specific challenges related to cross-border situations?
Are the conditions for the use of other sources of funding in resolution, such as liquidity facilities, policyholder protection schemes or standalone resolution funds, transparent and predictable in your jurisdiction? If not, what action or information would increase predictability? Are there additional complications related to cross-border situations?
Are there additional or different considerations to be applied to the above questions based on whether the insurer is part of a conglomerate or not?
Please submit your feedback to the FSB by 15 March 2022. Responses will be published on the FSB’s website unless respondents expressly request otherwise. The FSB will also host a workshop with stakeholders in Q2 2022 around the same questions.