IAIS published its annual Global Insurance Market Report (GIMAR) for 2024, detailing the results of this year’s Global Monitoring Exercise (GME), the IAIS’ risk assessment framework to monitor key risks and trends and detect the potential build-up of systemic risk in the global insurance sector.
- Stable solvency and profitability levels: Insurers maintained stable solvency and profitability levels, supported by strong underwriting performance and robust investment returns. Insurers’ systemic footprint increased but remained well below those of banks on aggregate.
- Key risks and supervisory responses: Analysis covers two key macroprudential themes: (1) the impact of the current macroeconomic environment on the insurance sector and (2) structural shifts in the life insurance sector, including increased asset allocation to alternative investments and increased usage of cross-border asset-intensive reinsurance.
- Climate-related risks: The report examines the insurance sector’s exposure to transition risks in investment portfolios as well as the potential materiality of natural catastrophe (NatCat) risks. It flags that it is increasingly critical for insurance supervisors to strengthen their understanding of the type and magnitude of climate-related risks and exposures of the insurance sector. The GIMAR aims to provide a global baseline for climate risk data.
- Looking ahead: Life insurers are expected to maintain or improve solvency ratios through strong capital reserves and effective risk management, while non-life insurers are anticipated to sustain stable solvency ratios supported by robust underwriting and investment income. Uncertainty, however, remains, with geopolitical tensions posing risks to the global economic landscape, and digitalisation and artificial intelligence offering benefits, yet also posing liquidity and cyber risks.
Basel, Switzerland – The International Association of Insurance Supervisors (IAIS) today published its annual Global Insurance Market Report (GIMAR) for 2024, detailing the results of this year’s Global Monitoring Exercise (GME), the IAIS’ risk assessment framework to monitor key risks and trends and detect the potential build-up of systemic risk in the global insurance sector.
“The Global Insurance Market Report 2024 underscores the resilience and stability of the insurance sector, reflecting effective risk management and robust financial performance,” said Shigeru Ariizumi, IAIS Executive Committee Chair. “The report’s analysis highlights the sector’s ability to address challenges and navigate future uncertainties, thereby ensuring its continued resilience.”
Insurers experienced an increase in total assets and stable solvency and profitability levels at year-end 2023, supported by strong underwriting performance and investment returns. Liquidity positions improved slightly, with insurers focusing on maintaining adequate liquidity buffers. The systemic risk score of participating insurers in the GME rose by 5.3% at the end of 2023 compared to 2022, mainly due to a significant increase in level 3 assets.[1] Overall, insurers’ systemic risk scores remain significantly lower than those of banks, indicating that the insurance sector has a lower systemic risk footprint.
Two themes identified through the 2024 GME for deeper analysis were (1) key risks in the current macroeconomic environment and (2) structural shifts in the life insurance sector.
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