Conventional insurance is not systemically risky, and systemic risk can only originate from a very limited number of activities undertaken on a large scale in the wrong conditions. A greater focus by the International Association of Insurance Supervisors (IAIS) on potentially systemic activities of the insurance sector as a whole is therefore warranted, according to Insurance Europe.
In its response to an IAIS consultation on its new holistic framework for assessing systemic risk in insurance, Insurance Europe highlighted the need for every jurisdiction to achieve comparable outcomes when applying the framework, to ensure a global level playing field.
Insurance Europe also stressed the need for a strict and consistent application of the principle of proportionality. It added that proportionality should not be limited to requiring insurers to apply a measure with different expectations of granularity; rather, it means questioning whether an insurer shall be subject to a certain measure at all.
Insurance Europe also stressed that the new data collection requirements proposed by the IAIS would significantly increase reporting burdens for both insurers and supervisors. Additional data collection from insurers should in fact be minimised and data that is already available should be taken fully into account.