WASHINGTON BUREAU — Life insurers are joining with property-casualty insurers worldwide to ask the Group of 20 to distinguish between the banking industry and the insurance industry when trying to address systemic risk.
Trade groups representing both U.S. and non-U.S. insurers and reinsurers asked for the distinction to be made in a letter sent to the U.S. Treasury Department in advance of a G-20 meeting set to start Nov. 11 Seoul, Korea.
The G-20 represents the biggest, richest economies. Meeting organizers hope to address ways the largest nations can join to improve regulation of the world financial system.
The International Association of Insurance Supervisors, Basel, Switzerland, has urged other financial services regulators to recognize the differences between insurers and other types of financial services companies.
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Now insurers are contending in their letter that insurers have a different risk profile than banks, and that subjecting insurers to additional capital and reporting requirements to reduce systemic risk could well “have the opposite effect, by increasing the risk of moral hazard and causing market distortions.”
Moreover, insurers say, “the identification of individual insurers as being systemically important financial institutions (SIFIs) and subjecting them to additional capital and reporting requirements would miss the ultimate goal of achieving greater financial stability.”
Insurers say they have done relatively well during the financial crisis in comparison with other financial services sectors.
“This is evidence that the insurance regulatory