It would be unfair to include insurance companies in the European Union’s proposed banking levy, industry supervisors said Sunday.
Yoshihiro Kawai, secretary general of the International Association of Insurance Supervisors (IAIS), said the insurance industry should not be caught up in efforts to clamp down on banks in the wake of the financial crisis. EU leaders have said they support the idea of a bank levy despite a lack of support internationally, although details are yet to be worked out.
Last week, EU officials wrote in a report that a levy on banks could be applied to other financial services firms, stirring fears that insurers could also be targeted. [See IJ web site – https://www.insurancejournal.com/news/international/2010/06/08/110531.htm ].
“In my view, it’s really unfair that insurance is included because the business model is so different, and it’s not the core insurance business which creates this kind of crisis,” Kawai said in an interview with Reuters and Reuters Television.
Insurers “play a stabilizing role for the financial system rather than amplifying or originating system concerns. I feel very uncomfortable that the insurance business is being treated the same way as banking in terms of this levy.”
Since the financial industry is increasingly interdependent through products, markets, and conglomerates, financial supervisors should cooperate, monitor and if needed, address a gap of regulation, Kawai said.
For the insurance sector, group-wide supervision is particularly important to avoid regulatory gaps, he noted.
But this does not mean applying the same rules to insurers as to banks, he stressed, in line with industry calls for the Group of 20 countries to exempt insurers from new regulatory rules.
Asked if policy-makers were listening, Kawai said: “I hope so. We stress very much the different business model and that insurance is not an originator or amplifier of risks, that’s quite well heard by our political masters and the G20 FSB,” or Financial Stability Board.
(Writing by Krista Hughes; Editing by Jan Paschal)
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