Guernsey performs well in global peer review of enterprise risk management for solvency purposes

The Bailiwick of Guernsey has achieved a good result in a recent International Association of Insurance Supervisors (“IAIS”) peer review process (“PRP”) focused on how insurers manage risk relating to solvency. This result confirms the earlier findings of the IAIS Member Assessment Programme published in 2019.

The objective of the IAIS PRP is a point-in-time assessment to deepen awareness of the nature and extent of any gaps in a jurisdiction’s supervisory and regulatory frameworks in relation to the IAIS Insurance Core Principles (“ICPs”). As such, it serves as a helpful tool to identify areas where a jurisdiction could introduce further enhancements to its supervisory and regulatory framework.  

In October 2024, the IAIS published results of its PRP of Insurance Core Principle 16 (“ICP 16”). ICP 16 is one of 25 ICPs that collectively form the globally accepted framework for insurance supervision. It covers supervisory expectations of insurers to establish an enterprise risk management (ERM) framework for solvency purposes to identify, measure, report and manage the insurer’s risks in an ongoing and integrated manner. A total of 67 authorities participated in the PRP of ICP 16, including Guernsey.

Overall Results

Below is a summary of the results of the recent PRP for all 67 participating authorities:

Guernsey Assessment

The PRP concluded that, for Guernsey, ICP 16 is Largely Observed. This means that, in common with 41 other participating jurisdictions, the team undertaking this PRP considered that Guernsey’s regime has only minor shortcomings, and that there are no concerns with Guernsey’s ability to achieve full observance.

ICP 16 is broken down into 16 standards. Of the 16 standards, Guernsey achieved the highest result level of “observed” for eight standards,[1] with the remaining eight standards achieving the second highest result level of “largely observed”. For these latter eight standards, only minor gaps were noted. The Commission acknowledges the helpful recommendations contained in the report to address these gaps and that detail where Guernsey can further enhance its observance, including, for example, enhancing the Commission’s expectations of specific elements to be included in the underwriting policy, development of liquidity risk management processes by licensees, as well as the need to assess aggregate counterparty exposures as part of the ORSA process.  

The Commission is supportive of the work of the IAIS, the ICPs and, specifically, the results of this PRP. It will continue to incorporate international practices into its supervisory and regulatory framework, as appropriate, and in a manner appropriate for the size and nature of Guernsey’s insurance industry. If any changes to the Commission’s supervisory and regulatory framework are envisioned because of this PRP, these would only be made after appropriate consultation with Guernsey’s insurance sector.

Jeremy Quick the Director of the Commission’s Banking and Insurance Division commented:

“Guernsey’s insurance sector and policyholders alike should feel reassured by this latest IAIS assessment revealing that we are performing well when judged against international standards. These recent results are further evidence that the Commission is achieving the Goldilocks - 'just right' - balance on international compliance, whilst avoiding unnecessary and costly gold-plating.”