GFIA response to the IAIS consultation on proposed policy measures for G-SIIsRelease Date: 12/21/2012 Staff Reference: Janice Hilchie
The Global Federation of Insurance Associations (GFIA) through its 32 member associations represents insurers that account for around 87% of total insurance premiums worldwide. GFIA is active on a broad range of issues affecting the international insurance industry, including developments in the systemic risk debate.
GFIA welcomes the work conducted by the IAIS on systemic risk with the objective of contributing to a stable and sustainable international financial system. In particular, we appreciate the IAIS’ genuine efforts to develop a specific approach for insurance, given the important differences between insurance and other sectors, and especially banking.
GFIA appreciates the opportunity to comment on possible measures. However, we have found this exercise rather difficult in the absence of sufficient clarity on the envisaged methodology to identify systemically important insurers (G-SIIs) and systemically relevant activities. This is especially so given the importance of ensuring that the policy measures address the causes of systemic risk, as acknowledged by the IAIS (paragraph 4). To be effective in addressing systemic risk concerns, measures must be carefully tailored and targeted at the risk they are intending to address. However, as it is not clear which measures are intended to apply to which activities it is very difficult to provide generic comments on the measures proposed in the consultation. What is clear, however, is that each insurer has a unique risk profile and unique book of business and that blanket application of additional requirements on a group-wide basis will not effectively target areas of higher risk.