In its circular "Liquidity - insurers", the Swiss Financial Market Supervisory Authority FINMA specifies provisions under supervisory law for risk management by setting out principles for insurers' cash flow reporting. The consultation will end on 2 October 2012.
Alongside capital management, liquidity management provides a holistic view of capital strength and is a central element of financial corporate governance. It means the ability of a company to meet due payment obligations in full and in time.
Supervisory rules on organisational structure require insurance companies to identify, mitigate and monitor all risks in an appropriate manner. This also includes liquidity risk which is a main risk in the financial sector. In this regard, the draft circular defines requirements for risk management and formulates principles for capturing insurers' liquidity risks and their subsequent reporting.
Circular is set in a broader regulatory context
The Circular "Liquidity for insurers" is set in the context of further regulatory measures being taken by FINMA. Experience in the practical application of the fully revised insurance supervision legislation at ordinance and legislative level (in force since 1 January 2006), the full introduction of the SST as of 1 January 2011, regulatory developments at first made in the EU, and the equivalence test for insurance supervision in Switzerland conducted by EIOPA in autumn 2001 have shown the need for reform. In collaboration with the Swiss Federal Department for Finance and in consultation with the insurance sector, the changes are to be tackled at first at the circular level and that of the Swiss Federal Ordinance on the Supervision of Private Insurance Companies (ISO).
Tobias Lux, Media Spokesperson, phone +41 (0)31 327 91 71, email@example.com