Global insurers identified as too big to fail will have to hold higher reserves and draw up recovery and resolution plans to limit the economic fallout should they go bust, the industry’s watchdog said, Bloomberg News reported yesterday. The International Association of Insurance Supervisors (IAIS), which collected data from 50 insurers in 14 jurisdictions, including the U.S., to help the Financial Stability Board (FSB) draw up a list of systemically important firms, released its assessment methodology and policy measures today. The list of insurers will be announced by the Basel, Switzerland-based FSB in coming days. The companies on the FSB insurer list will be included based on criteria such as size, global activity and the amount of non-insurance businesses they have. The IAIS would impose tougher capital standards on the systemically important insurers to increase their capacity to absorb losses and require them to design recovery and resolution plans to meet cases of severe financial distress. The FSB said in June it will follow up next year with a list of too-big-to-fail reinsurers.
