Recovery and resolution plans for insurers

When banks in Europe and the US became unable to honour their financial obligations in 2007 and 2008, governments bailed most of them out. Recovery and Resolutions Plans (RRPs) are supposed to stop such a dilemma arising again.

The Financial Stability Board, in consultation with the International Association of Insurance Supervisors (IAIS) are planning to do the same for the insurance industry by the end of April 2013 (although this may be delayed slightly).

This article looks at the implications for the insurance sector and why some insurers are sceptical about the use of RRPs.