“Time must always be allowed for a cost/benefit analysis in advance of any new regulation,” Frank Swedlove, chair of GFIA.
“Unintended consequences must be carefully considered,” he insisted, referring to the current work on global capital standards by the Financial Stability Board (FSB) and International Association of Insurance Supervisors (IAIS) and also to the OECD’s work on taxation.
“As the FSB and IAIS design new global capital standards — under the pressure of a highly ambitious timetable — it is important that insurers’ exposure to market volatility is not overestimated. Such artificial volatility could reduce insurers’ willingness and ability to invest long-term in areas such as infrastructure. It could also have a significant impact on the availability and price of insurance products," he said.
GFIA has had a series of meetings with the Australian G-20 Presidency this week.
“The GFIA welcomes the Australian G-20 Presidency’s focus on long-term growth and its ambitious targets,” said Swedlove, who is also president of the Canadian Life & Health Insurance Association.
“Sustainable long-term growth requires not only the financial security that insurers offer through efficient risk-transfer mechanisms but also the industry’s long-term investments.”
Without insurance many aspects of today’s society and economy could not function, he said, oting that, for example, of the $186bn of damage caused by major disasters in 2012, $77bn, or 41%, was covered by insurers.
“It is vital that the ability of insurers to offer risk-transfer and retirement products and to invest long-term is maintained and encouraged,” said Swedlove.
“The link must always be made between international regulatory initiatives and the G-20’s long-term growth objectives.”
“The insurance industry looks to the Australian G-20 Presidency to ensure there is appropriate political scrutiny before any new global standard is agreed,” Swedlove added.