Any new EU proposals should be tailored to the insurance business model
Post-crisis regulation has been implemented to ensure that banks have recovery and resolution plans in place and that regulators have all the necessary tools at their disposal in order to quickly deal with the failure of a bank, thereby limiting contagion of the wider financial system and losses for taxpayers.
European institutions are assessing whether similar special measures are needed to deal with the potential failure of an insurer. We believe that existing insolvency regimes at local level have been proven to be appropriate and have dealt effectively with any insurer failures. Insurers also fail in a different way to banks, which means that the systemic risk potential of any failures is limited.
Our study, “Why insurers differ from banks”, highlights why regulators should consider existing frameworks instead of copying rules applicable to another sector. Any new rules for the resolution of insurers need to be tailored to the unique insurance business model and be proportionate to the objectives of resolution.