Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

26 October 2010

CEA co-signs industry letter to G20: Insurance business model different from banking model


Default: Change to:


The CEA and 16 other insurance associations and federations have written to the leaders of the G20 ahead of their summit next month, covering issues such as global trade, accounting, regulation, capital requirements, levies and taxes.


As regards the insurance business model the letter states that it should be acknowledged that the vast majority of insurers were relatively unscathed in the financial crisis owing in large part to the unique characteristics of their business model and products. It is essential to distinguish between the core insurance business model and those of other financial services such as banking. Insurers use rigorous risk management strategies and direct premiums into secure investments that appropriately match the expected amount of benefits paid and the duration of the policies. Banks generally have a liquidity mismatch between their assets and liabilities since they tend to fund themselves short-term. Insurers do not have the same liquidity risks since their liabilities are generally not liquid given the deterrents and penalties to early surrender by policyholders.


© CEA - Comité Européen des Assurances


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment