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The list of prudential KPIs are sorted primarily into the CARAMELS categories:

  1. Capital
  2. Asset quality
  3. Reinsurance
  4. Actuarial issues
  5. Management soundness
  6. Earnings and profitability
  7. Liquidity and ALM
  8. Subsidiaries and related parties
  9. Industry-wide

The KPIs are compiled from a number of sources, primarily Hafeman (2020), Kwon and Wolfrom (2016) and the IAIS Application Paper on Information Gathering and Data Analysis (2010). Technical explanations of each KPI are referenced in the column 'Notes'. Readers are encouraged to refer to the source material directly.

Reporting, gathering and analysing KPIs and data are costly. Which KPIs are most important for supervisors to collect? There is no one-size-fits-all-supervisory-needs.

The A2ii is currently developing an implementation guide that aims to support supervisors from Sub-Saharan Africa in optimising their collection of data and KPIs. In the meantime, existing literature provides a good sense of which KPIs are more critical. This aspect has been included in the table below in the following ways:

  1. Column Most used or useful denotes whether the KPI is in the list of top 27 KPIs that are either most frequently used or considered most useful by 33 insurance supervisors surveyed in the Hafeman (2020) study (marked with a Yes). Also see pp. 22-24 of the study for the breakdown.
  2. Column IMF FSIs denotes which six KPIs are included in IMF's 2019 Financial Soundness Indicators Compilation Guide, which IMF considers as core for macroprudential monitoring (marked with a Yes). 
  3. Column Notes provides further reference to the Kwon and Wolfrom (2016) study, which analyses the use of insurance supervisory KPIs, and the relative importance of each KPI as rated by 24 OECD and non-OECD insurance supervisors. 

Another key question: how does a supervisor know if a KPI number is good or bad?

Unless a quantitative threshold is explicitly set out in regulations, the question of benchmarks is subjective and depends on the local market context and supervisory approach. Many supervisors have developed an internal framework and guidance based on historical market and institutional experience. These benchmarks are not directly transferable to other jurisdictions without adapting, although the fundamental logic is similar. The Hafeman (2020) study provides information on benchmarks for some KPIs, theoretically in Annex 5, as well as examples of supervisory practices (pp. 26-30, pp. 105-112), if the information was shared by the supervisor.