Why (Re)insurance is Not Systemic

Denis Kessler

Journal of Risk & Insurance, 2014, vol. 81, issue 3, 477-488

Abstract: type="main" xml:lang="en">

The traditional model of (re)insurance lacks the elements that make a financial institution systemically important: risks are effectively pulverized; liabilities tend to be prefunded, which eliminates most of the leverage in the traditional sense; and active asset-liability management reduces most of the liquidity mismatch that traditionally propagates systemic risk. (Re)insurers that have stuck to this traditional business model have successfully weathered the crisis, even playing a stabilizing role. Unfortunately, this is not sufficiently recognized in the current IAIS/FSB debate on assessing systemic risk in the (re)insurance sector.

Date: 2014
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