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The resolution plan for insurers in France: Being prepared in case of a failure
Journal of Financial Compliance,
7
(1),
35-45
(2023)
Abstract
The failure of an insurer may affect policyholders as well as the broader economy. This explains why a resolution regime is useful, with the objective of making it feasible to maintain vital economic functions and activities, which are needed, without disruption and without exposing taxpayers to loss. The resolution regime is a core element of the policy measures adopted by the G20 in the wake of the global financial crisis and applies to banks in most countries, with France being one of the first EU member states to adopt a regime for the recovery and resolution of insurance undertakings. The work undertaken to prepare resolution plans consists of first identifying the functions deemed to be critical which should be maintained. For the resolution to be effective, this work needs to be complemented with analysis of the level of separability of these critical functions from the rest of the undertaking or group, as this is necessary to ensure operational continuity in the event that a resolution action is applied. The next step consists of specifying resolution strategies that could be applied to groups or bodies performing critical functions, in accordance with different possible crisis scenarios and taking into account different resolution tools used separately or in combination. Based on these elements, Autorité de Contrôle Prudentiel et de Résolution has adopted the first resolution plan for 13 insurers, but this needs to be complemented by additional analyses and additional information in order to cover all the topics needed to operationalise resolution strategies and ensure the resolvability of undertakings.
Keywords: recovery; resolution; insurers; critical functions; separability; interconnection
The full article is available to subscribers to the journal.
Author's Biography
Frédéric Visnovsky is Deputy Secretary General and Executive Director for Resolution at the Autorité de Contrôle Prudentiel et de Résolution (ACPR), the authority in France in charge of supervision and resolution of banking and insurance undertakings. An expert in banking regulation for more than 30 years now, Frédéric Visnovsky was the instigator of introducing internal control rules in the late 1990s and a central player in the international negotiations of the Basel 2 and 3 regulations. At the Banque de France since 1984, Frédéric Visnovsky started as financial analyst before becoming Financial Counselor at the French Embassy in Algeria for three years. Joining the Commission Bancaire, he was successively Head of Accounting Department when BAFI (new prudential reporting) was introduced (1992–1996), Head of the International Department during the Basel 2 negotiation (1997–2003) and Deputy Director and Director for Supervision of Mutual Banks and Investment Firms (2004–2011). Deputy Secretary General since 2011, Frédéric Visnovsky was, until 2018, in charge of the departments dealing with the supervision of banks, international affairs and study and Chair of the EBA Standing Committee on Accounting, Reporting and Auditing. In 2018, he took the position of Executive Director for Resolution and, at the same time, serves as the national Credit Mediator at Banque de France.
