PwC's Managing upstream risk: Regulatory reform review - An asian perspective December 2013 | Page 32

• Review longevity risk rules and regulations:
Policymakers should review rules and
regulations pertaining to the measurement,
management and disclosure of longevity
risk. This will help establish or maintain
appropriately high qualitative and
quantitative standards, including provisions
and capital requirements for expected and
unexpected increases in life expectancy.
• Ensure adequate risk-bearing capacity:
Policymakers should consider ensuring
that institutions taking on longevity risk,
including pension fund sponsors, are able to
withstand unexpected, as well as expected,
increases in life expectancy.

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Regulatory Reform Review | Insurance

• Monitor market developments:
Policymakers should closely monitor the
liquidity risk transfer taking place between
corporates, banks, (re)insurers and the
financial markets, including the amount and
nature of the longevity risk transferred, and
the interconnectedness this gives rise to.
• Pay attention to tail risk: Supervisors should
take into account that longevity swaps may
expose the banking sector to longevity tail
risk, possibly leading to risk transfer chain
breakdowns.
• Collect adequate data: Policymakers should
support and foster the compilation and
dissemination of more granular and up-todate longevity and mortality data that are
relevant for the valuations of pension and
life insurance liabilities.