Systemic risk, recovery and resolution

Systemic risk in insurance can only originate from a very limited number of activities undertaken on a large scale in the wrong conditions.


GFIA has always argued that conventional insurance is not systemically risky and that an entity-based assessment of systemic risk is inappropriate.


GFIA engages with international bodies such as the International Association of Insurance Supervisors and the Financial Stability Board on behalf of the global insurance industry with respect to systemic risk. GFIA explains why conventional insurance is not systemically risky and why a proportionate, activity-based approach to assessing risks is the right one.

Post-crisis regulation has been implemented to ensure that banks have recovery and resolution plans in place and that regulators have the necessary tools to deal quickly with a bank failure, thereby limiting contagion of the wider financial system and losses for taxpayers.

International institutions such as the Financial Stability Board are now assessing whether similar special measures are needed to deal with the potential failure of an insurer.

GFIA is engaging with policymakers to explain insurers’ unique business model and why contagion risks are so much lower in insurance than in banking.

Report: “Insurance: a unique sector”

The insurance industry is a unique sector that is highly regulated and has a very different risk profile from banks and other financial sectors.

Insurers, banks and other financial institutions have traditionally operated in the financial services industry in separate regulatory universes. However, discussions of insurance regulation among global financial regulators continue to draw heavily on the banking model, ignoring important differences between the banking and insurance business models and their risk exposures.


More recently, there have been a number of concerns raised about financial stability risks from a very broadly defined non-bank financial intermediation (NBFI) sector which are also often incorrectly projected on to the insurance industry. The NBFI sector is very diverse and includes investment and money market funds, private equity funds, venture capitalists, microloan organisations and crypto-“currencies”. Unlike insurers, many areas of the NBFI sector are not highly regulated, have limited public reporting and are highly interlinked with other areas of the financial system and real economy.


In this new report, GFIA details the significant differences between the insurance industry and other financial industries and why these distinctions must be taken into account by policymakers when considering future regulations. Importantly, GFIA explains why discussions of the regulation of the banking or NBFI sectors should not include insurance.

Thank to the Chilean Association (AACH), a Spanish version of the report is now available for download



The insurance industry is already, rightly, subject to comprehensive regulation. In our view, this regulation must consider the key features of the insurance business that make it unique.

– Angus Scorgie, chair Systemic Risk WG

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