PIN 2.2 PIN 2.2 Risk management
Insurer'srisk management systems must:(a) be appropriate to the size, business mix and complexity of the Insurer'soperations;(b) address all material risks, financial and non-financial, to which the Insureris likely to be exposed;(c) describe the relationships between the Insurer'srisk tolerance limits, its capital requirements, economic capital and the processes and methods for monitoring risk; and(d) be supported by adequate risk management policies and procedures which explain the risks covered, the measurement approaches used, and the key assumptions made.
The risk management systems maintained by an
Insurermust include:(a) a written risk management strategy approved by senior management, which in the opinion of senior management addresses all material risks to which the Insureris likely to be exposed;(b) risk management policies and procedures that in the opinion of senior management are adequate to identify, assess, mitigate, control, monitor and report on the material risks to which the Insureris exposed; and(c) clearly identified managerial responsibilities and controls, designed to ensure that the policies and procedures established for risk management are adhered to at all times.
Subject to PIN Rule 2.2.4, where an
Insureris a member of a Group, the Insurermust take reasonable actions to ensure that the Groupas a whole complies with the requirements of PIN Rule 2.2.1 and PIN Rule 2.2.2 as though the Groupas a whole were an Insurer.
PIN 2.2.4 PIN 2.2.4
PIN Rule 2.2.3 does not apply in respect of a
Groupwhere the Insureris not the Holding Companyand where the Holding Companyof the Groupis:(a) another Insurer; or(b) a Subsidiaryof another Holding Company.
PIN 2.2.4 Guidance1. The effect of PIN Rule 2.2.4 is to avoid duplication arising from complex
Groupstructures. If an Insureris a member of a Groupwhose Holding Companyis another Insurer, the first Insurerneed not apply PIN Rule 2.2.3 in respect of that Group, because the Insurerthat is the Holding Companyis al required to apply that Rule. Where an Insureris a member of two or more Groupsthat are also sub-groups of a single Group, the Insurermay consider that single group as a whole for the purposes of this section. An Insurerthat is a Holding Companyis however still required to apply PIN Rule 2.2.3 in respect of any Groupof which the Insureris the Holding Company.2. An Insurershould describe how its risk tolerance limits described in PIN Rule 2.2.1(c) link with its corporate objectives, business strategy and current circumstances. An Insureris expected to embed its risk tolerance limits into its day-to-day operations and its risk management policies and procedures.