Regulators detail new capital buffer for top insurers

LONDON, July 9 Wed Jul 9, 2014 12:17pm EDT

LONDON, July 9 (Reuters) - Regulators published on Wednesday details of how the world's top nine insurers will calculate their first global capital buffer from 2019 to ensure policyholders are protected in a crisis.

The International Association of Insurance Supervisors (IAIS) was issuing a second round public consultation on its plan for a basic capital requirement, or BCR.

Leaders of the Group of 20 economies (G20) have called for this measure in the teeth of opposition from insurers, who say the 2007-09 financial crisis which has sparked a flurry of new regulation was not caused by their sector.

Axa, Generali, MetLife and Aviva are among the nine so-called global systemically important insurers who will be affected.

But exactly how much extra capital they may need to hold will also depend on the size of an additional safety buffer, made up of bonds, that will not be fleshed out by the IAIS until 2015 or later.

The watchdog proposed in its consultation to give each type of insurance activity specific weightings which are totted up to calculate the BCR. Assets like shares have a higher weighting than less risky mortgage insurance.

In total, 15 factors will be considered within three key categories of insurance activities: traditional life insurance, non-life insurance and non-traditional insurance and assets.

The IAIS will publish its final BCR rule in time for a G20 summit to endorse in Brisbane, Australia, in November.

That month the regulators will also review their list of top insurers that could see re-insurers being included for the first time. (Reporting by Huw Jones; Editing by Mark Heinrich)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.