Financial Stability Board consults on when insurers should be subject to recovery and resolution planning and proposes broader critical function definition

The Financial Stability Board published a consultation report with draft guidance to help national resolution and supervisory authorities determine which insurers should be subject to the recovery and resolution planning (RRP) requirements in the FSB Key Attributes for Effective Resolution Regimes. The proposal sets out a structured approach for identifying insurers whose stress or failure could be systemically significant or otherwise affect financial stability, while making clear it does not reinstate the discontinued global systemically important insurer identification process. The draft guidance would have the relevant authority make an ex ante, criteria-based assessment using six factors: nature, scale, complexity, substitutability, cross-border activities and interconnectedness. It also identifies circumstances in which RRP requirements should apply regardless of the broader criteria assessment, including where an insurer provides a critical function that cannot be substituted within a reasonable time and at a reasonable cost, and where the insurer’s failure is likely to have a significant impact on the financial system or the real economy, including by materially affecting a large number of policyholders or triggering systemic disruption or a loss of general confidence. The report also proposes revising prior FSB materials on insurers’ critical functions by changing the impact test from “financial system and the real economy” to “financial system or the real economy”, with corresponding updates to earlier FSB publications if finalised. Comments are requested via a secure online form by Friday 6 February 2026, with responses to be published unless respondents request otherwise.