Financial stability
Swiss Re is actively engaged in the global regulatory debate
In July 2013, the International Association of Insurance Supervisors (IAIS) and Financial Stability Board (FSB) announced a list of nine primary insurance groups considered global systemically important insurers (G-SIIs). The designation of reinsurers has been delayed to July 2014.
The initiative to identify and designate global systemically important financial institutions (G-SIFIs) is led by the FSB under the authority of the G20. The FSB designates financial institutions that it considers to be large, complex and interconnected enough to disrupt the global financial system if they came into financial distress.
The IAIS is developing a specific set of policy measures to be applied to G-SIIs. The main aspects of the policy measures consist of three pillars (see below).
The IAIS and other regulatory authorities have determined that traditional insurance and reinsurance activities are unlikely to be a source or amplifier of systemic risk. Swiss Re endorses that view.
Swiss Re is well prepared for the upcoming regulatory changes as it already operates in one of the most advanced economic-based solvency regimes (the Swiss Solvency Test) and is subject to comprehensive group supervision under an active College of Supervisors chaired by the Swiss Financial Market Supervisory Authority FINMA. Swiss Re is concerned, however, that the ongoing regulatory reforms are overly focused on the size and interconnectedness of re/insurance groups, which undermines the essential idea of insurance: benefiting from risk pooling and global diversification to better manage risks.
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Highlights of IAIS policy measures for global systemically important insurers (G-SIIs): |
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Enhanced supervision |
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Effective resolution |
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Higher loss absorption (HLA) |
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