FI to roll traffic light model into barometer
SWEDEN - Finansinspektionen (FI), the Swedish Financial Supervisory Authority, is incorporating its existing ‘traffic light’ model of stress-testing into a new ‘insurance barometer’.
The traffic-light system, introduced in 2005, currently measures insurance companies’ and occupational pension funds’ exposure to various risks - such as large fluctuations on the financial markets - to identify those who might not be able to meet customer commitments.
However, the FI has now confirmed the level of reporting by the insurance sector will be increased through the introduction of an “insurance barometer” which will form “part of FI’s efforts to develop its communication with both the public and companies”.
In addition to data on returns, consolidation and solvency the FI said the new barometer will also “deal with the insurance companies’ market conditions”, while the traffic light stress test “will be included in the new barometer from now on”.
The FI currently publishes updates on the financial risks in the traffic light model approximately every three months, in addition to an annual update on the entire system, however information will now be published twice a year under the new barometer.
The information on insurance companies will also be included in the FI’s annual Financial Stability Report, and although no date has yet been scheduled for the first publication of the barometer in 2009, the FI stated insurance companies “will continue their reporting as usual”.
The last update from the traffic light model, published in February, revealed three pension funds - equivalent to 2% of the pensions market - were showing under a “red light” as the total buffer capital of the pension funds declined at the end of 2008. (See earlier IPE article: Three Swedish pension funds report ‘red light’)
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