The global insurance industry is lobbying the G20 ahead of its upcoming meeting in Seoul next month, arguing that insurers should not be lumped in with banks in the re-regulation of the financial services industry.

In a letter signed by 17 insurance associations, including the Canadian Life and Health Insurance Association and the Insurance Bureau of Canada, the industry argues that insurers do not pose any undue systemic risk, and as such, it believes that labeling certain firms as being systemically important financial institutions and subjecting them to additional capital and reporting requirements “would miss the ultimate goal of achieving greater financial stability.”

“Indeed such an approach could very well have the opposite effect by increasing the risk of moral hazard and causing market distortions,” it says.

Additionally, the organizations ask that proposals to strengthen resolution frameworks not be applied to the financial sector as a whole “without giving due consideration to the insurance business model and the orderly winding-up procedures already existing in insurance regulation.”

The letter also says insurers should not be subject to any taxes to cover the cost of government interventions, as they are less likely to be the recipients of such interventions.

The letter asks regulators not to saddle the industry with excessive capital requirements, and it calls for coordination between regulators on global issues.

“The global insurance industry is of the firm view that a ‘one-size-fits-all’ approach to regulation would not be appropriate,” said CLHIA president, Frank Swedlove.

IE