On 22 April 2010, the Organisation for Economic Co-operation and Development (the “OECD”) published a paper on the impact of the financial crisis on the insurance sector. The content of the paper is largely based on the findings of a special questionnaire completed in spring 2009 at the Insurance and Private Pensions Committee meeting and subsequent working party findings.
The three sections of the paper aim to:
- in Part A – clarify the impact of the financial crisis on the insurance sectors of OECD countries;
- in Part B – summarise and review governmental and regulatory responses to the crisis; and in Part C –identify certain regulatory and policy
- issues and propose general policy conclusions.
The paper states in its conclusion that “the OECD Insurance and Private Pensions Committee has, on several occasions, discussed the issues raised by the financial crisis and considers that it is important to draw some key policy conclusions from the crisis and its impact on the insurance sector in order to provide further impetus for financial reform.” Its key conclusions for reform are the need to:
- promote strengthened on-going surveillance of the insurance sector and cross-border supervision and information exchange;
- encourage greater consideration of macro-economic linkages and macro-prudential risks in insurance sector policymaking, regulation and supervision;
- encourage convergence, over the long term, to a common core regulatory framework for internationally active insurers;
- ensure adequate and comprehensive regulation of group and conglomerate structures and eliminate gaps or differences among regulatory or supervisory systems where appropriate;
- strengthen insurer corporate governance standards;
- properly consider “too-big-to-fail” and systemically important insurers;
- ensure the orderly exit of failing insurers and ensure that governments have the full range of tools and powers to intervene effectively as necessary for the benefit of policyholders and the financial system broadly;
- ensure adequate transparency in decision making; and
- promote financial education and literacy.
To view a full copy of the OECD report, please click here. http://www.oecd.org/dataoecd/42/51/45044788.pdf