|Targeted News Service|
The following is a statement from
The IAIS agreed on a quantitative methodology which produces a relative ranking of firms based on metrics thought to be relevant for determining systemic importance. However, in our view, the analysis conducted to date by the IAIS is not sufficient by itself to draw the conclusion that any or all of the firms on the list are GSIIs.
Further, we continue to believe that traditional insurance activities are not systemically risky. Therefore, we urged that a comprehensive comparison of GSIIs with proposed systemically important banks be conducted to assess the threat posed by potential GSIIs relative to financial firms in other sectors. In other words, understanding whether the most systemically risky insurer (by virtue of its nontraditional or noninsurance activities) is still less risky than the least systemically risky bank, is relevant before making a designation and recommending additional requirements that will bifurcate the market.
Despite having the largest number of GSIIs within our jurisdictions, U.S. state insurance regulators have little insight into the deliberations at the FSB, so it is unclear whether other information beyond the IAIS work was considered. Mitigating systemic risk is an objective all financial regulators share, but given the impact of this effort on financial firms and their customers and the potential for an unlevel playing field in otherwise competitive and healthy insurance markets, it is important to get this right.
TNS 24HariRad-130719-30FurigayJane-4428878 30FurigayJane
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