The Prudential Authority is publishing the proposed Prudential Standard FSI 6 – Liquidity Risk Management for Insurers (Standard) for formal consultation. The first draft of the Standard was released for informal public consultation on 28 May 2024 and the relevant comments received through that process were incorporated into the revised draft Standard. The Standard seeks to strengthen the regulatory framework for identifying, assessing, monitoring, managing and reporting liquidity risk by insurers and is intended to repeal and replace the current Prudential Standard FSI 6 – Liquidity Risk Assessment for Insurers which does not adequately address insurers’ resilience to sudden cash flow pressures and seeks to close this gap by aligning domestic requirements with the International Association of Insurance Supervisors’ framework. The proposed Standard introduces a consistent Insurance Liquidity Ratio, embeds liquidity risk within insurers’ risk appetite frameworks, strengthens stress testing requirements, requires insurers to maintain appropriately valued high-quality liquid assets, and introduces monthly cash-flow reporting requirements. These measures support the early detection and mitigation of liquidity risks, thereby protecting policyholders and promoting financial stability.