GFIA report stresses unique stability of insurance sector, warns against unnecessary regulations

In a recent publication by the Global Federation of Insurance Associations (GFIA), the unique characteristics of the insurance industry have been emphasised, highlighting the need for policymakers to consider these distinctions when formulating future regulations.

The report, titled “Insurance: A unique sector,” underscores the highly regulated nature of the insurance sector, coupled with a stable long-term business model that shields individuals and businesses from financial adversity.

The GFIA report draws a clear distinction between the insurance industry and other financial sectors, asserting that insurers have significantly lower exposure to systemic and liquidity risks when compared to banks and non-banking financial entities.

Susan Neely, President of GFIA, emphasised the vital role of the insurance industry in serving people and global economies by effectively pooling and diversifying risks.

Neely highlighted the industry’s robust regulatory framework, solid capitalisation, and a proven track record in risk management. Additionally, she pointed out a key differentiator – insurers’ investments are typically long-term, providing a shield against short-term market volatility.

Neely commented on the potential consequences of imposing unjustified additional regulations that fail to acknowledge these industry-specific differences.

She said that such regulations could undermine the effectiveness of insurers and their significant contribution to society. Moreover, Neely cautioned that introducing unnecessary regulations could lead to increased costs, ultimately passed on to consumers.

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