IAIS GIMAR 2022 highlights key risks

The International Association of Insurance Supervisors (IAIS) has published its 2022 Global Insurance Market Report (GIMAR), outlining the key outcomes of its 2022 Global Monitoring Exercise (GME). The GME builds on data collected from approximately 60 of the largest international insurance groups and aggregate sector-wide data from supervisors across the globe, covering over 90 percent of global written premiums.

“Through the GME, the IAIS monitors global insurance market trends and developments, detects the possible build-up of systemic risk and facilitates a collective discussion on the appropriate supervisory response at the sectoral and individual insurer level,” said Vicky Saporta, IAIS executive committee chair. “Our analysis concludes that systemic risk in the insurance sector is moderate on aggregate and low relative to that of the banking sector, however insurers’ total systemic risk scores are trending upward.”

The trend toward higher total systemic risk scores is driven by increased exposures to illiquid, difficult-to-value assets (level 3 assets), over-the-counter derivatives, short-term funding (in particular repurchase transactions) and intra-financial assets (including reinsurance). This contributes to potential vulnerabilities for the insurance sector, notably in the face of rapidly increasing interest rates.

The 2022 GME covers three sector-wide macroprudential themes identified as supervisory areas of priority:Lower macroeconomic outlook, high inflation and rising interest rates, structural shifts in the life insurance sector, including the involvement of private equity firms climate-related risks.