Systemic risk and insurance regulation

Fabiana Gómez and Jorge Ponce
Additional contact information
Fabiana Gómez: University of Bristol

No 2018003, Documentos de trabajo from Banco Central del Uruguay

Abstract: Without systemic risk exposure, the formal model in this paper predicts that optimal regulation may be implemented by capital regulation (alike that observed in practice) and actuarially fair technical reserve. However, these instruments are not enough when insurance companies are exposed to systemic risk. In this case, prudential regulation should also add a systemic component to capital requirements which is non-decreasing in the firm's exposure to systemic risk. Implementing the optimal policy implies to separate insurance firms in two categories according to their exposure to systemic risk: those with relatively low exposure should be eligible for bailouts, while those with high exposure should not benefit from public support if a systemic event occurs.

Keywords: Insurance companies; systemic risk; optimal regulation (search for similar items in EconPapers)
JEL-codes: G22 G28 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2018
New Economics Papers: this item is included in nep-ias and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.bcu.gub.uy/Estadisticas-e-Indicadores/ ... 20Trabajo/3.2018.pdf First version, 2018 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bku:doctra:2018003

Access Statistics for this paper

More papers in Documentos de trabajo from Banco Central del Uruguay Biblioteca Especializada. Banco Central del Uruguay. Diagonal Fabini 777, Montevideo-Uruguay. CP 11100. Contact information at EDIRC.
Bibliographic data for series maintained by Biblioteca Especializada ().