CONTENTS

Glossary 4

EXECUTIVE SUMMARY 6

INTRODUCTION 11

A. Scope and Approach of this Note 11

B. Institutional and Market Setting 12

KEY RISKS AND VULNERABILITIES 18

A. Liquidity Risks and Lapse Rates 18

B. Market Risks – Interest Rate and Inflation Vulnerability 21

C. Exposure to Sovereign Debt 21

D. Cyber Risk 22

E. Natural Catastrophes and the Insurance Protection Gap 24

PRUDENTIAL REGULATORY FRAMEWORK 29

A. Solvency II Review 30

SUPERVISORY FRAMEWORK 31

A. Institutional Mandate, Resources and Powers 31

B. Scope of Insurance Supervision 39

C. Supervisory Processes 41

D. Supervisory Intervention and Sanctions 53

E. Recovery and Resolution 55

F. Supervision of Cross-Border Insurers 64

G. Supervision of Climate-Related Risks 65

MACROPRUDENTIAL SUPERVISION 67

A. Analysis of Insurance Sector-Wide Risks 67

B. Analysis of Potential Systemic Importance of Individual Insurers 68

C. Analysis of Interconnectedness with Other Parts of the Financial System 69

D. Supervisory Intervention on Macroprudential Basis 69

E. Publication of Data About Insurance Sector 70

BOXES

1. Eurovita Case: Key Lessons and Impacts 60

2. IVASS Sustainability Priorities 66