INSURANCE INDUSTRY: LIQUIDITY RISK MANAGEMENT PROPOSALS OUT FOR COMMENT

INSURANCE INDUSTRY: LIQUIDITY RISK MANAGEMENT PROPOSALS OUT FOR COMMENT

• 28 May 2024
• Financial Sector
• SA Legal Academy

The Prudential Authority has called for input by 31 July 2024 on two sets of proposals affecting liquidity risk management in the insurance industry:

• a draft standard, and
• a guidance notice.

An accompanying statement of need outlines the expected impact and intended operation of the framework envisaged.

According to a communication on the two documents, the draft standard sets out practices and guidelines for complying with:

• risk management-related internal controls, and
• own risk solvency assessment obligations.

The guidance notice unpacks them, bearing in mind that:

• it ‘aims to illustrate approaches that should be considered in identifying, measuring and managing an insurer's liquidity risk’
• ‘some elements … may not be relevant to all insurers in terms of the application of practices or guidelines’
• other elements ‘may need to be varied based on an insurer’s circumstances and characteristics’, and that
• once finalised the standard will replace the existing prudential standard FSI 6.

Please click the links below to access the documents:

• proposed replacement standard
• draft guidance notice
• existing standard
• communication calling for input
• additional documents, including statement of need and comments templates

Published by SA Legal Academy Policy Watch

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