The Global Federation of Insurance Associations (GFIA) has called on the G-20 to ensure that all international regulatory reform initiatives allow the insurance sector to continue to support the ambitious economic growth targets agreed last month by G-20 finance ministers.
This was discussed at a series of meetings late last month in Australia, attended by members of the representative body for the global insurance industry.
“The GFIA welcomes the Australian G-20 Presidency’s focus on long-term growth and its ambitious targets,” said Frank Swedlove, chair of the GFIA and president of the Canadian Life & health Insurance Association. “Sustainable long-term growth requires not only the financial security that insurers offer through efficient risk-transfer mechanisms but also the industry’s long-term investments.”
The insurance sector is one of the world’s largest institutional investors, with US$ 26.8 trillion of assets under management in 2012 and US$4.6 trillion of new premiums to invest annually. It is a significant holder of government and corporate bonds.
“It is vital that the ability of insurers to offer risk-transfer and retirement products and to invest long-term is maintained and encouraged,” said Swedlove. “The link must always be made between international regulatory initiatives and the G-20’s long-term growth objectives.”
He called for the cost/benefit analysis of any new regulation to be carefully considered, referring to the current work on global capital standards by the Financial Stability Board (FSB) and International Association of Insurance Supervisors (IAIS) and also to the OECD’s work on taxation. (continued.)
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“As the FSB and IAIS design new global capital standards — under the pressure of a highly ambitious timetable — it is important that insurers’ exposure to market volatility is not overestimated,” said Swedlove. “Such artificial volatility could reduce insurers’ willingness and ability to invest long-term in areas such as infrastructure. It could also have a significant impact on the availability and price of insurance products.”
“The insurance industry looks to the Australian G-20 Presidency to ensure there is appropriate political scrutiny before any new global standard is agreed,” said Swedlove.
Australia’s G-20 presidency runs from December 1, 2013 to November 30 of this year.
