In a letter to the G20 Presidency, GFIA highlighted four key messages which it believes should be explicitly referenced in the St Petersburg action plan.
1) Insurers are not banks. The insurance business model requires a tailor-made supervisory approach.
2) Risk-based regulatory frameworks should be encouraged. However, when using market values, care must be taken to ensure that the beneficial economic impact that long-term liabilities can have in reducing balance sheet volatility is recognised. Such frameworks should therefore be assessed, and adapted as necessary, to avoid unintended consequences for insurers’ ability to support long-term investment, sustainable economic growth and market stability.
3) Even well-intentioned regulations can have unintended consequences. GFIA therefore applauds the G20 for tasking the Financial Stability Board with a review of regulations to assess their impact on the ability and willingness of institutional investors, including insurance companies, to invest long-term. Due to their business model, insurers are natural long-term investors. On this note GFIA would like to reference the important progress that has been made in implementing derivative reform covering both centrally cleared and over-the counter (OTC) derivatives. GFIA asks G20 members to consider carefully the impact that the new rules on derivatives – particularly the use of cash as collateral – will have on market players including insurers.
4) It is important that G20 leaders reform and strengthen their commitment not to introduce new trade barriers.
GFIA hopes that as new regulatory initiatives are developed and refined, supervisors are as open and transparent as possible and provide ample opportunity for stakeholder involvement.
Full letter
© GFIA - Global Federation of Insurance Associations
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