However, GFIA is concerned that the paper's focus on the assessment and systemic relevance of individual insurers departs from the identification, monitoring and assessment of insurance sector-wide vulnerabilities and common exposures, and the risk of distressed or failing insurers or the collective actions or distress of a sufficiently large number of insurers.
GFIA would also like to highlight that the potential use of stress testing within individual insurers' own risk and solvency assessment (ORSA) reports is an inappropriate use of the ORSA concept. The ORSA is owned and managed by firms themselves, representing an "own view" of risk and so it would be inappropriate for supervisors to seek to specify stresses that insurers should apply in the ORSA.
The application paper should also encourage greater flexibility for supervisors in the manner in which they assess systemic risk, both at a sectoral level and with respect to individual insurers, given the differences across markets. Supervisors should be able to base their assessments on their knowledge of insurers, the markets they are responsible for and the data they already have access to. In this respect, the focus should be on outcomes in terms of the questions supervisors are seeking to answer.