Insurance and Issues in Financial Soundness
44 Pages Posted: 31 Jan 2006
Date Written: July 2003
This paper explores insurance as a source of financial system vulnerability. It provides a brief overview of the insurance industry and reviews the risks it faces, as well as several recent failures of insurance companies that had systemic implications. Assimilation of banking-type activities by life insurers appears to be the key systemic vulnerability. Building on this experience and the experience gained under the FSAP, the paper proposes key indicators that should be compiled and used for surveillance of financial soundness of insurance companies and the insurance sector as a whole.
Keywords: insurance, financial stability, soundness indicators
JEL Classification: G20, G22
Suggested Citation: Suggested Citation