Identification of Critical Functions of Insurers: Practices paper
The identification of critical functions is an important part of resolution planning, which is often conducted as a first step to help inform resolution planning decisions.
The Key Attributes of Effective Resolution Regimes for Financial Institutions set out the core elements that the FSB considers to be necessary for an effective resolution regime. Their application should allow authorities to resolve financial institutions in an orderly manner without exposing taxpayers to loss from solvency support and maintain continuity of financial institutions’ vital economic functions. The identification of these critical functions is therefore a core part of resolution planning and is often conducted as one of the first steps to build the basis for further resolution planning decisions.
During recent years, FSB member jurisdictions have started developing their frameworks for the resolution planning of insurers and the identification of critical functions of insurers and acquired first practical experiences.
This Practices Paper sets out the approaches taken by Australia, China, France and the Netherlands for the identification of critical functions of insurers. Each have developed policy for, or significantly progressed their thinking on, the identification of critical functions in their jurisdiction. The paper outlines commonalities and differences in background, scope, methodology and review process. The paper also describes the main critical functions which were identified and the main considerations which supported the identification of critical functions, providing illustrative examples for each jurisdiction.