Systemic Risk in the Insurance Sector: Review and Directions for Future Research
Journal
Risk Management and Insurance Review
Series
WORKING PAPERS ON FINANCE
ISSN
1098-1616
Type
journal article
Date Issued
2016
Author(s)
Abstract
This article reviews the extant research on systemic risk in the insurance sector and outlines new areas of research in this field. We summarize and classify 48 theoretical and empirical research papers from both academia and practitioner organizations. The survey reveals that traditional insurance activity in the life, nonlife, and reinsurance sectors neither contributes to systemic risk nor increases insurers’ vulnerability to impairments of the financial system. However, nontraditional activities (e.g., credit default swap underwriting) might increase vulnerability, and life insurers might be more vulnerable than nonlife insurers due to higher leverage. Whether nontraditional activities also contribute to systemic risk is not entirely clear; however, the activities with the potential to contribute to systemic risk include underwriting financial derivatives and providing financial guarantees. This article is not only likely of interest to academics but also highly relevant for the industry, regulators, and policymakers.
Language
English
Keywords
Systemic Risk
Insurance
Solvency II
Financial Crisis
HSG Classification
contribution to scientific community
HSG Profile Area
SOF - System-wide Risk in the Financial System
Refereed
Yes
Publisher
Wiley-Blackwell
Volume
19
Number
2
Start page
249
End page
284
Subject(s)
Division(s)
Eprints ID
254707
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14_21_Eling et al_Systemic Risk in the Insurance Sector.pdf
Size
321.64 KB
Format
Adobe PDF
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