Patrick Liedtke, secretary general and managing director of the Geneva Association, an insurance research body, has slammed the G-20 talks held in London last week for failing the insurance industry.
In a letter sent ahead of the G-20 meeting, the Geneva Association and 49 of the world's largest insurance and reinsurance companies called for any future industry regulation to take into account the specific characteristics of the insurance industry when compared to other financial services.
According to Liedtke, the G-20 meeting failed to address these differences.
"The London Statement speaks of "major failures in the financial sector", abandoning the careful distinction...made between those institutions that caused the crisis, i.e. banks and large complex financial institutions, and those that did not, i.e. insurance operators," Liedtke wrote.
The G-20 leaders called on the accounting standard setters to work urgently with supervisors and regulators to improve standards on valuation and provision and achieve a single set of high-quality global accounting standards. But Liedtke argues that over the past decade the institutions that lead the process have failed to make adequate progress when it comes to the norms of the insurance industry.
"The G-20 leaders should have obliged these institutions to cooperate closer with the business sector, as is regularly the case for other standard setters," said Liedtke. "Accounting standards will only work if and when they reflect economic realities, which for insurance comprises recognition of the special long-term nature of the business."
The London Statement also calls for the establishment of a new Financial Stability Board (FSB) with a strengthened mandate. Given the importance of insurance and reinsurance companies, which hold around 11% of global financial assets, Liedtke believes it is imperative that experts on insurance are going to be adequately represented at the new FSB.
The agreement in the London Statement that the senior leadership of international financial institutions should be appointed through an open, transparent and merit-based selection process does not ensure that the background of the experts will be as varied as the financial services industry itself, Liedtke warned.
"Currently too little insurance knowledge finds itself into these international financial institutions, to the detriment of an equilibrated approach making use of specialist knowledge that the sector has to offer, particularly on risk management," Liedtke said.