Advertise
Resources
Member, Beacon International Group, Ltd.
The failure of a hypothetical major U.S. property/casualty insurer would not have a systemic effect on financial markets or the economy as a whole, according to a study released Monday by the Property Casualty Insurers Assn. of America.
The study, “Systematic Solution not Systemic Problem—Distinguishing Insurance Market Risk from Systemic Importance,” will be presented to the International Assn. of Insurance Supervisors as it addresses global systemic risk regulation.
The study was prepared for PCI by law firm Steptoe & Johnson L.L.P.
Like other insurance trade groups, the PCI long has opposed treating property/casualty companies as presenting systemic risks to the larger economy.
Impact limited
Although the failure of a major property/casualty insurer “may have some market impact” on the sector, it would not have a systemic impact on the wider economy or even the financial sector, according to the study.
This is because of what the study called “a unique combination of industry attributes,” including the nature of property/casualty products, what the study called “the competitive dynamics of the industry,” the limited types and scope of property/casualty company investment risks, and the comprehensive regulatory and resolution systems that govern the activity of property/casualty companies.