A study published today by Insurance Europe and Oliver Wyman confirms the European insurance industry as the largest institutional investor in Europe, with an estimated €8.5trn of assets under management in 2012.
With new banking rules forcing banks to reduce levels of maturity mismatching and liquidity risk that were common pre-crisis, and with funds required to stimulate economic growth, the study highlights that Europe faces a total funding gap of between €4trn and €5trn between 2012 and 2016.
Insurers can provide long-term, stable funding for governments and business as a natural match to the long-term maturity of their liabilities, so without incurring liquidity risk.
“Our study confirms that insurers are a vital and ideal source of the long-term funding the European economy desperately needs,” said Sergio Balbinot, president of Insurance Europe. “As we carry out our primary function as providers of risk-transfer, protection and pension products, we benefit from a continual flow of premiums and predictable claims that enable us to keep investing when others withdraw. Insurers therefore play an important stabilising role in the economy.”
”The insurance industry provides funding for activities on which European economic growth depends,” said Jan-Hendrik Erasmus, partner at Oliver Wyman. “These range from infrastructure projects, mortgages and government debt to investments in small and large businesses. Also, because insurance policies often result in predictable cash flows for insurers they have a structural advantage in providing long-term financing.”