The International Association of Insurance Supervisors (IAIS) has revised its assessment methodology for designating global systemically important insurers (G-SIIs).

The update – made under a three-yearly review cycle – features a five-phase approach.

The first two are the quantitative components of the methodology, and include data collection. The third phase collects and analyses further quantitative or qualitative information missed in the earlier phases.

In the fourth phase prospective G-SIIs can receive information regarding their status and present additional information relating to any aspect of the methodology.

The final phase provides an overall assessment of the G-SII, with a recommendation to the Financial Stability Board.

The five phases address issues in the old methodology relating to indicator responsiveness, systemic risk and data quality.

The new methodology uses absolute reference values for derivatives trading, financial guarantees and reinsurance indicators.

It will apply to all types of insurance and reinsurance.

Meanwhile, the IAIS has published a paper outlining a framework that shows why certain product features have the potential for systemic risk.

The paper – Systemic Risk from Insurance Product Features – also describes the rationale for the IAIS’ discontinuation of the non-traditional, non-insurance product label and its replacement with a more granular assessment of product features.