On the Financial Regulation of Insurance Companies

| June 7, 2017

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This paper presents a discussion of the key issues facing the financial regulation of
insurance companies in the post-crisis era. While the moral hazard created in the financial sector
by provision of financial guarantee insurance is difficult to overstate, we focus on the issues
concerning insurers’ excessive provision of insurance, under-capitalization, and related systemic
risks. We argue that these systemic risks stem from a too-interconnected-to-fail problem,
manifested most perversely in the case of A.I.G. We provide a way to measure the systemic risk
contributions of insurers based on market data and calculate this measure (called Marginal
Expected Shortfall or MES) for insurers in the United States during the period 2004-2007. We
show that several insurers ranked highly on this measure compared to systemically risky banks
over this period.

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OTHER ARTICLES

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Open Banking and Trust a key issue

Article | April 15, 2021

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Financial institutions are going to face increasing challenges around protecting end users’ data, ensuring access is only given to those with the appropriate authorisations and permissions. A very real risk for them is the reputational one; after all, end users may not be that good at separating a reputational issue around open banking from broader issues around their banking relationship. For Financial Institutions, maintaining trust in their brands is going to be crucial going forward, but the risks are going to increase if they have not locked down who can access end user account data and funds.

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SEB is a leading Nordic financial services group with a strong belief that entrepreneurial minds and innovative companies are key in creating a better world.

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