February 28, 2017 / 5:51 PM / 9 months ago

Global regulators delve deeper into risks from insurers

LONDON, Feb 28 (Reuters) - Global regulators have begun to examine whether to introduce new rules from 2019 to contain possible risks to the financial system from the activities of large, international insurers.

The International Association of Insurance Supervisors (IAIS) said it was developing an “activities-based” approach to help determine the minimum amount of capital big, cross-border insurers should be holding to protect policyholders.

The IAIS is already finalising broad capital buffers for insurers based on the size and complexity of companies, which are due to come in from 2022.

The approach based on looking at any risky activities undertaken by insurers could lead to new rules coming in as early as 2019, which would then shape the broader global capital regulations due to be implemented three years later.

“This well-articulated workplan will allow the IAIS to develop a comprehensive framework for the assessment and mitigation of systemic risk, building on the work carried out so far,” Victoria Saporta, chair of the IAIS executive committee, said in a statement.

Insurers identified as being globally-systemic in 2020, for example, will need a “higher loss absorption” capacity, the IAIS said.

Insurers have long insisted they don’t pose the same risks to the global financial system as banks, some of which had to be bailed out during the 2007-09 financial crisis.

The move by the IAIS echoes steps by global regulators to look at risks from the activities of the fast-growing asset management sector too. (Reporting by Huw Jones; editing by David Clarke)

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