On June 25, 2015, the International Association of Insurance Supervisors (IAIS) published a consultation paper on the higher loss absorbency (HLA) requirement for global systemically important insurers (G-SIIs), seeking feedback on several options relating to the design, development and calibration of the HLA.

The primary purpose of the HLA is to help reduce the probability and impact on the financial system of the distress or failure of a G-SII. When the HLA requirement is implemented G-SIIs will be expected to hold regulatory capital that is not less than the sum of the required capital amounts from the basic capital requirements (BCR) and the HLA.

The HLA is to be delivered to the G20 for endorsement in November 2015 and will apply to G-SIIs from 2019.

The consultation closes on August 21, 2015.