Insurance Regulation and Financial Stability – Creating the Right Incentives

Some insurance valuation standards might lead to herding behaviour of insurers in times of severe financial stress.

On September 15, Nina Arquint, Head of Group Qualitative Risk Management, participated at the Eurofi Financial Forum. This event, organized by Eurofi, a European think tank dedicated to financial services, is an annual gathering of senior representatives from both industry and public authorities, to discuss major on-going regulatory projects in the financial area. Nina contributed as a panelist in the session "systemic risks and resolution in the insurance sector".

The panelists debated objectives and features of a global systemic risk framework for insurance companies notably appropriately factoring in the specificities of the sector and the current economic and monetary context. The discussion centered around what type of regulatory approaches would be most effective in ensuring that insurers do not contribute to future financial crises. Nina warned that certain aspects of newer insurance valuation standards, such as those used in Solvency II, might inadvertently lead to herding behavior of insurers in times of severe financial stress.

The article, published in the recent Eurofi magazine on page 234, further elaborates.

Supporting financial resilience

Re/insurance supports financial resilience by acting as a shock absorber and promoting growth through its core businesses. This is particularly important in a challenging and volatile macro-economic environment.

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