Why Liquidity Rules Are Tightening?

On 5 December 2024, at its Annual General Meeting, the IAIS adopted the Insurance Capital Standard (ICS) as the global, risk-based group capital standard for internationally active insurance groups.

In the UK if you're an IAIG (or part of one), ICS will be a supervisory reference point for group capital and comparability, alongside Solvency.

Why does it matter?

This change is remarked as a huge step towards 'global rules' in insurer capital, as reported by the Financial Times.

Alongside Solvency, these changes will affect buffers, fungibility, and dividend capacity.

The plan as today is to develop the methodology this year, self-assessment in 2026, then jurisdictional implementation assessments from 2027.

Separately, the PRA (part of the Bank of England and the UK’s prudential supervisor for banks and insurers) - has consulted on requiring large UK life insurers to provide daily liquidity data during periods of stress. (Reuters)

All of this lands against a backdrop of heightened market volatility and rate uncertainty, reinforcing the need for real-time liquidity visibility, resilient funding plans, and tighter treasury controls.