International regulators in July listed nine such insurers, including AIG and Allianz SE, in a prelude to requiring them to hold more capital from 2019 to cover risks to the financial system. Inclusion on the list hinges on the size of the insurer, whether it is involved in risky activities such as derivatives and its global reach.
The insurers criticised the approach, arguing that the sector did not cause the 2008 financial crisis and should therefore not be tarred with the same regulatory brush as banks and have to shoulder increased costs of holding more capital as a safety buffer.
Felix Hufeld, the top insurance supervisor at German financial watchdog Bafin, said without giving details that the companies would have options to remove their names on the list once the rules are finalised later this year.
Global insurance supervisors are still in the process of developing appropriate regulation for systemically important insurers, he said. Insurance supervisors are working on defining global standards for basic capital requirements, which they hope to have ready for a G20 meeting in Brisbane in November.
Hufeld said insurance supervisors could not simply copy the approach used by banking regulators, because insurance was a fundamentally different business.
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