Insurance and Resolution in light of the Systemic Risk Debate
This fourth report in The Geneva Association series on Financial Stability and Insurance provides more detailed analysis of how insurance recovery and resolution mechanisms work. This analysis will provide a more solid foundation on which the ongoing discussions about systemically risky financial institutions can be based and inform the designation discussions underway at the FSB with support from the International Association of Insurance Supervisors (IAIS).2 The issue of how an institution fares in its possible resolution is highly relevant to the final designation as a Globally Systemically Important Financial Institution (G-SIFI). Since, in full accordance with the FSB’s approach, any institution that can demonstrate that its potential failure would not “cause significant disruption to the financial system and economic activity” cannot be deemed a G-SIFI as the precondition of causing systemic disruption would not be met.
