Global financial regulators have decided to throw out the ‘too big to fail’ gauge for assessing the riskiness of insurers, according to a report from Reuters that cites a source briefed on the matter.
If true, the decision would be a big win for companies such as American International Group (AIG), which face more intense scrutiny under the regulation and have to hold more capital to cover potential losses.
In its report, Reuters states that the Financial Stability Board (FSB), which coordinates financial regulation across the G20 economies, is expected to announce in a switch in focus from insurers’ size to their activities when deciding whether to subject them to increased regulatory oversight.
The insurance industry has lobbied regulators for years to adopt an activities-based approach, on the basis that size should not automatically qualify them for ‘global systemically important insurer’ status.
Reuters said the shift in the FSB’s approach follows pressure from the US Treasury Department, which has been pressing the FSB to ease up on insurers and asset managers. AIG was removed from the US list of systemically important insurers in September by the group of US regulators known as the Financial Stability Oversight Council.
Full article on Commercial Risk (subscription required)
© Commercial Risk Europe
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article