Filed Under:Your Practice, Regulatory

Scope of data shows wide picture of any systemic risk

What would we see if we had access to all the confidential data?

From the way that a key executive board member of the International Association of Insurance Supervisors (IAIS) and the Basel Committee of Banking Supervision views globally systemic risk, it appears that some insurers are considered to be systemically risky in a very broad sense of the term.

Paul SharmaIn remarks at the NAIC international forum in Washington last week and in remarks to a reporter, it is clear Paul Sharma, executive director of policy and deputy head of the U.K.’s Prudential Regulation Authority (PRA), believes he sees facets in the giant prism of economic risk that many do not see or mention in general public discussions.

With international companies, “we believe supervisory colleges are a prudent and appropriate vehicle. We have had two to face, another one coming up. All our regulators are invited. It is a very robust and comprehensive discussion. It is a “terrific way to do top-down analysis,” Vocke said. “There is no historical evidence that insurers, on their own pose, systemic risk.” He added that he does not think parent Berkshire Hathaway is on the G-SII candidate list.

But, most companies and sector regulators can only see a slice of metrics in the public domain driving insurance risk, Sharma suggested in his remarks. 

There are some who would say, let's designate some companies to keep a closer eye on them, just in case things could go wrong, to be on the safe side, said the former NAIC CEO and international regulatory affairs expert on behalf of the U.S. states. 

“I strongly believe that these well-intentioned efforts could carry tremendous unintended consequences for the insurance sector,” said Vaughan, who now sits on a few company boards.

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Nichole Morford

Nichole Morford
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