The president of the CEA has called on regulators and policymakers to ensure that any initiatives in response to the financial crisis are appropriate for the sectors to which they apply. Moreover, regulators should differentiate between financial services sectors.
CEA also urged policymakers and regulators to differentiate between financial services sectors.
Tommy Persson, president of the CEA, the European insurance and reinsurance federation, has called on regulators and policymakers to ensure that any initiatives in response to the financial crisis are appropriate for the sectors to which they apply.
“The assumption that what is valid for banking must be valid for insurance is too simplistic,” Persson told over 300 delegates attending the CEA’s 2nd International Insurance Conference in central London.
The CEA firmly supports appropriate and rigorous supervisory and regulatory standards for insurers. It believes that it is possible to strengthen the global financial system without undermining parts of it, and calls for all national, European and international regulatory proposals that affect insurance to recognise the distinct and unique business model of insurers.
Because of their business model, insurers usual have stable, upfront funding to cover their liabilities and limited exposure to liquidity risk. Interconnectivity between insurers is also much lower than that between banks, reducing any likely transmission of systemic risk.
“The crisis did not originate in the insurance sector but we see a tendency among regulators not to recognise this, even though the insurance industry has shown resilience to the worst effects of the crisis,” said Persson.
In his conference speech, Persson highlighted a worrying trend for efforts to reduce the impact of systemic risks to the economy to be applied to all financial institutions, not just to those that generate such risks. “This fails to recognise that core insurance activities do not generate systemic risk,” said Persson.
Persson also highlighted the insurance industry’s concerns that it might be included in blanket government taxes or levies to pay for past or future crises. “To introduce a kind of crosssubsidisation ... would reward riskier financial entities at the expense of less risky ones, such as insurers,” he insisted.
© CEA - Comité Européen des Assurances
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