FSB to publish list of systemically important reinsurers next July

Globe

The Financial Stability Board (FSB) has published its list of nine international insurers whose failure would pose systemic risk to the global financial system.

The list, derived from methodology from the International Association of Insurance Supervisors (IAIS), comprises Allianz, American International Group, Assicurazioni Generali, Aviva, AXA, MetLife, Ping An Insurance Company of China, US non-life insurer Prudential Financial and UK life insurer Prudential plc.

The list will be updated annually and published each November, starting in November 2014.

The FSB also revealed it would publish a list of globally systemically important reinsurers in July 2014.

Each of the identified insurance companies will have to implement a series of resolution and planning requirements. They will also face tougher group-wide supervision and higher loss absorbency requirements.

Backlash

However, European insurance lobby group Insurance Europe has criticised the methodology used to create the list and the proposals to address the perceived systemic risk posed by the insurers.

A statement from Insurance Europe said the methodology “has not been sufficiently tailored to the insurance business model”, adding: “Likewise the measures that the FSB/IAIS propose to apply to those insurers are not aligned with the actual risks posed by insurers.”

Insurance Europe director general Michaela Koller said: “Insurance Europe supports efforts by policymakers to ensure financial stability. However, a system that leads to the identification of insurers, rather than specific activities, that might pose systemic risk is not correct.

“Traditional insurance business has been shown not to create or amplify systemic risk, since the business is long-term, funding is generally upfront and liquidity risk and interconnectedness are low. The ability of the insurance industry to take a long-term approach has been widely recognised as allowing it to reduce rather than amplify systemic risks and overall market volatility.”

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