Recovery planning: Guidance note for consultation

Recovery planning aligns the response to severe stress with overall ERM strategies. The recovery plan framework's trigger points are aligned with ERM risk appetite limits, and its governance structure is integrated with the ERM framework.

Recovery planning differs from CISSA

Recovery planning envisions the insurer being confronted with severe stress now and contemplates the actions needed to mitigate the stress. 

CISSA predominantly focuses on identifying the potential impact of plausible but severe stress on current and prospective solvency.

Timeline

Regulatory developments:

• Nov 2024: BMA issued recovery planning rules.
• April 2025: BMA issued recovery planning guidance notes for consultation detailing BMAs expectations.
• May 2025: The rules are operational.

Regulatory considerations

The introduction of recovery planning framework is an essential pillar in strengthening BMA’s prudential framework.

Although the guidance note offers additional details, BMA’s expectations for the structure and content of recovery planning remain consistent with the previously issued recovery planning rules. 

Insurers in scope are expected to receive formal communication on preparing a recovery plan.

Who is in scope?

Commercial insurers that can pose a systematic risk:

• Insurance groups for which the BMA is the group wide supervisor,
• Insurers carrying on domestic business,
• Medium sized insurers, i.e. a three-year rolling average total assets of at least $10 billion,
• Growing insurers, i.e.  on a three-year rolling average total gross written premiums of at least $5 billion,
• An insurer under enhanced monitoring by the BMA or any relevant supervisory authority.

Key elements to consider

Executive summary

Highlights: Significant triggers, recovery options, scenario analysis, and communication strategies.

Trigger framework

Triggers should be aligned with the insurer’s risk appetite and CISSA frameworks. They should be forward-looking.

Recovery options

Each considered option should be accompanied by detailed analyses of its feasibility, financial impact, strategic implications, and potential constraints.

Scenario analysis

Initial scenarios, regular simulations, dry runs and feedback learning loops are essential to ensure the plan’s practical effectiveness.

Communication strategies 

Implementation considerations include articulating suitable triggers for plan activation, establishing the frequency and depth of plan updates, obtaining clarity on governance requirements.

Governance

The board approves the recovery plan. There should be a committee responsible for the activation and implementation of the recovery plan, with a key member responsible for efficient delivery of the plan. A key BMA contact should be assigned. 

Regulatory compliance

The rules are operational from 1st of May 2025. The recovery plan shall be reviewed at least once every three years or; When there is a material change in the financial position, strategy, business and risk profile of the insurer. An updated recovery plan is to be submitted to the BMA within 30 days of being updated.