CEA sets out European insurance industry views ahead of G20 Seoul Summit
09 November 2010
The CEA calls on the leading governments, their regulators and their central banks to give due and proper consideration to the differentiated nature of insurance when deciding on any measures to address systemic risks.
Systemically important financial institutions (SIFIs)
CEA calls on the G20 governments, their regulators and their central banks to give due and proper consideration to the differentiated nature of insurance when deciding on any measures to address systemic risks.
Based on the criteria for the identification of systemic risk drawn up by the FSB and the IAIS, the CEA strongly believes that the core insurance business model does not generate systemic risk that is directly transmitted to the economy. There is far lower contagion risk, higher substitutability and lower financial vulnerability than in banking.
CEA therefore shares the view of the IAIS that there is little evidence of regulated insurance companies having either generated or amplified systemic risk within the financial system itself or in the real economy. The insurance sector is, of course, like many other sectors of the modern economy, susceptible to systemic risks generated in other financial sectors. On this basis, CEA believes that individual insurers should not be categorised as systemically important financial institutions (SIFIs). CEA strongly believes that the identification of insurers as SIFIs, making them subject to additional capital and reporting requirements, would undermine the ultimate goal of achieving financial stability, since it would increase moral hazard and cause market distortions.
© CEA - Comité Européen des Assurances
