The International Association of Insurance Supervisors (IAIS) released its proposed assessment methodology (proposed methodology) for identifying globally systemically important insurers (G-SIIs). Supervisors, insurers and other interested parties are able to submit comments on the proposed methodology until 31 July 2012.

The proposed methodology emerged from discussions amongst G20 members and the Financial Stability Board (FSB) about the need to design measures to reduce the moral hazard problems posed by globally systemically important financial institutions. The IAIS proposes an indicator-based assessment methodology that relies on 18 indicators that are organised under 5 categories: size, global activity, interconnectedness, non-traditional insurance and non-insurance activities, and substitutability.

In designing the proposed methodology, the IAIS relied upon its November 2011 report titled Insurance and Financial Stability, which concluded that there is little evidence that traditional either generates or amplifies systemic risk within the financial system or real economy, however this risk can arise when insurers enter non-traditional insurance or non-insurance activities. As a result, the indicators assign higher risk weightings for non-traditional and non-insurance activities.