IAIS observer hearing: Assessment of systemic risk indicators in the insurance sector
17 February 2011
The Geneva Association has a high interest in contributing to the IAIS work on systemic risk and financial stability but continues to express concern regarding the political decision taken to develop a list of insurance SIFIs.
In responding to G20/FSB, it is important that the IAIS develops and adequate methodology with appropriate instruments to:
· Asses the activities which could be potentially systemically risky (as per FSB/IAIS criteria); and
· Apply indicators specific to the systemic risk activities to identify potential global SIFIs.
Core insurance activities are not a source of threat to the financial and economic system. There are, however, two potentially systemically risky activities that requires further assessment (derivatives speculation/financial guarantees and mis-managing short-term funding) as contained in an earlier report by the Geneva Associations.
In responding to the IAIS’ consultation, a set of indicators for the identification of the potentially systemically risky activities is proposed.
Some of indicators contained in the IAIS’ memorandum can be used in a more targeted fashion. Other indicators will not work to indentify those activities that are systemically risky, while at the same time they are likely to focus on others which pose no systemic risk.
© Geneva Association
