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Insurance and Issues in Financial Soundness

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Author Info

  • Udaibir S. Das
  • Richard Podpiera
  • Nigel Davies

Abstract

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.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/138.

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Length: 44
Date of creation: 01 Jul 2003
Date of revision:
Handle: RePEc:imf:imfwpa:03/138

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Related research

Keywords: Financial stability; Financial soundness indicators; insurance companies; life insurers; life insurance; insurance industry; reinsurance; life insurance companies; non-life insurance; policyholders; underwriting; market risk; credit risk; insurance supervisors; financial reinsurance; liability insurance; life insurer; capital markets; loss ratio; contractual savings; life insurance company; risk management; insurance products; risk transfer; casualty insurance; pension funds; insurance supervision; risk profiles; insurance commissioners; arbitrage; life insurance products; insurance statistics; life insurance industry; insurance risk; banking crises; reinsurance contracts; risk mitigation; reinsurance contract; captive insurance; commissioners; insurance markets; workers compensation; deposit insurance; actuarial assumptions; primary insurer; solvency supervision; general insurance; financial systems; insurance regulation; facultative reinsurance; insurance contracts; social security; ceding commission; capital gains; investment products; capital requirements; catastrophes; accounting rules; risk diversification; conventional insurance; life insurance policy; pension funding; private insurance; social security programs; insurance claims; regulatory approaches; risk transfer arrangements; risk modeling; product liability; regulatory agencies; insured events; risk assessment; derivative markets; risk profile; contingent liabilities; proportional reinsurance; professional liability; risk market; insurance reserves;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Gilles Benoist, 2002. "Bancassurance: The New Challenges," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 27(3), pages 295-303, July.
  2. Rudolf Enz, 2000. "The S-Curve Relation Between Per-Capita Income and Insurance Penetration," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 25(3), pages 396-406, July.
  3. Kenneth Kang & Hong Liang & Henry Ma & Anthony J. Richards & Ajai Chopra & Meral Karasulu, 2001. "From Crisis to Recovery in Korea," IMF Working Papers 01/154, International Monetary Fund.
  4. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  5. Odedokun, M. O., 1996. "Alternative econometric approaches for analysing the role of the financial sector in economic growth: Time-series evidence from LDCs," Journal of Development Economics, Elsevier, vol. 50(1), pages 119-146, June.
  6. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
  7. International Monetary Fund, 2002. "Financial Soundness Indicators," IMF Occasional Papers 212, International Monetary Fund.
  8. Yehning Chen, 1999. "Banking Panics: The Role of the First-Come, First-Served Rule and Information Externalities," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 946-968, October.
  9. J. David Cummins & Martin F. Grace & Richard D. Phillips, 1998. "Regulatory solvency prediction in property-liability insurance: risk-based capital, audit ratios, and cash flow simulation," Working Papers 98-20, Federal Reserve Bank of Philadelphia.
  10. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  11. S R Diacon & K Starkey & C O'Brien, 2002. "Size and Efficiency in European Long–term Insurance Companies: An International Comparison," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 27(3), pages 444-466, July.
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Citations

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Cited by:
  1. J. François Outreville, 2011. "The relationship between insurance growth and economic development - 80 empirical papers for a review of the literature," ICER Working Papers 12-2011, ICER - International Centre for Economic Research.
  2. Pasiouras, Fotios & Gaganis, Chrysovalantis, 2013. "Regulations and soundness of insurance firms: International evidence," Journal of Business Research, Elsevier, vol. 66(5), pages 632-642.
  3. S. Nuri Erbas & Chera L. Sayers, 2006. "Institutional Quality, Knightian Uncertainty, and Insurability," IMF Working Papers 06/179, International Monetary Fund.
  4. Peter Haiss & Kjell Sümegi, 2008. "The relationship between insurance and economic growth in Europe: a theoretical and empirical analysis," Empirica, Springer, vol. 35(4), pages 405-431, September.
  5. Udaibir S. Das & Marc Quintyn & Kina Chenard, 2004. "Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis," IMF Working Papers 04/89, International Monetary Fund.

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