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David Strachan, co-head of the Deloitte Centre for regulatory Strategy, said:
“Publication of the list of global systemically important insurers (G-SIIs) will not end the debate or controversy. The capital backstop and surcharge for G-SIIs have still to be developed and the question of which, if any, reinsurers are systemically significant will not be settled for another year.
“As expected, the list of nine G-SIIs is much shorter than the list of 28 global systemically important banks (G-SIBs). This reinforces the point that has been made by the insurance industry all along, namely that insurers generate much less systemic risk than banks, and largely from their non-traditional non-insurance activities (NTNIA). This key distinction is reflected in the policy measures which the International Association of Insurance Supervisors (IAIS) has put forward.
“The policy measures for G-SIIs, however, extend to traditional insurance business as well. A case in point is the need for G-SIIs to produce group-wide recovery and resolution plans (RRPs). To date the focus of the FSB’s RRP work has been banks. It is essential that RRPs for G-SIIs recognise the specificities of the insurance sector and are applied in a proportionate way. The IAIS's policy measures acknowledge this. But we will have to wait for more tangible evidence of this until later this summer when we will see how the FSB’s revised Key Attributes deal with insurance.”