"Whilst the debate around whether an insurer is systemically important is still contested, the release of this list represents the first step in a process which will potentially culminate in additional levels of regulatory capital being held."
The Financial Stability Board (FSB) has this morning (19 July 2013) released a list of global systematically important insurance companies (referred to as G-SIIs).
Jim Bichard, partner in PwC's insurance team, said:
"Following the development of a SIFI concept, the FSB have been working on the application of a suitable approach for the insurance sector. Whilst the debate around whether an insurer is systemically important is still contested, the release of this list represents the first step in a process which will potentially culminate in additional levels of regulatory capital being held.
"The FSB has set the tone with its initial focus on G-SIBs and the development of stringent measures for this group, and we are now seeing similar frameworks being introduced into the insurance world. The work of the IAIS is critical in ensuring an appropriate measure is developed for this unique market, as opposed to a simple copy from the banking framework. In addition, the work of the IAIS developing a global capital standard will play a significant role in achieving a consistent international approach.
"From our perspective, banks have invested significantly, reflecting the level of effort and work required to address some of the new systemic policy measures, such as recovery plans. Some of the insurers on this list have already developed their own responses to these measures and it is this kind of early preparation which will help them in the long run.
"Whilst the list contains nine insurers who are deemed globally important, we expect that other internationally active insurers will follow these developments closely as regional and domestic policy-makers are already developing standards for their domestic markets. Furthermore, the IAIS continues to develop its own common framework for international active insurance groups."
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