The Bank for International Settlements’ Financial Stability Institute (FSI) published an executive summary on risk-based solvency (RBS) regimes for insurers, drawing on the International Association of Insurance Supervisors’ (IAIS) guidance on how supervisors and policymakers can transition to an RBS framework. It frames the move as a multi-year reform programme combining regulatory change with supervisory and industry training, structured project planning and ongoing engagement with insurers and other stakeholders. The note describes RBS as a framework that links required capital to insurers’ risk profiles and is supported by corporate governance expectations, covering quantitative elements (including valuation of assets and liabilities, capital requirements and eligible capital), qualitative elements (governance, risk management and internal controls), and reporting and disclosure requirements. It highlights implementation choices such as concept-led versus legislation-led sequencing and phased versus simultaneous rollout, alongside practical challenges including IT and data upgrades, actuarial and risk expertise, and cultural change. Jurisdictional experience cited suggests implementation commonly takes five to 10 years or more, and technical design typically centres on a total balance sheet approach, prescribed and minimum capital requirement control levels, decisions on whether valuation aligns to financial reporting standards such as International Financial Reporting Standard 17, and how to calibrate and aggregate capital charges across key risk types with proportionality and transition periods where needed.
Bank for International Settlements - Financial Stability Institute 2025-11-27
Bank for International Settlements Financial Stability Institute publishes executive summary on transitioning to risk-based insurance solvency regimes
The Bank for International Settlements’ Financial Stability Institute published an executive summary on transitioning to risk-based solvency regimes for insurers, drawing on International Association of Insurance Supervisors guidance and framing the shift as a multi-year reform combining regulatory change, training, structured project planning and stakeholder engagement. The note outlines key components of risk-based solvency, discusses implementation choices such as sequencing and rollout, and highlights practical challenges including IT and data upgrades, actuarial and risk expertise, and cultural change, with jurisdictional experience indicating implementation often takes five to ten years.