- Publication date
- 1 May 2014
This paper addresses the issue of systemic risk in the financial sector and its relevance with regard to insurance activities. The initiatives which followed the 2008 global financial crisis to address the risks posed by Systemically Important Financial Institutions are analyzed, with a focus on the Global Systemically Important Insurers Designation Process and Policy Measures, developed by the International Association of Insurance Supervisors and adopted by the Financial Stability Board in July 2013. The potential consequences of the SIFI project for financial stability, in general, and the Global Systemically Important Insurers framework, in particular, are also discussed. The incentives which are being introduced for the reduction of systemic risk may have unintended consequences, such as an increase of moral hazard and intensified uncertainty. The ongoing work regarding the design, calibration and, in some cases, implementation of such policy measures is, therefore, of capital importance.