2014 - Regulating Systemic Risk in Insurance - Schwarz - Law Review

2014 - Law Review -  Regulating Systemic Risk in Insurance, Schwartz - 73p


For analyses that largely dismiss the possibility that the insurance industry is systemically risky outside of certain limited, nontraditional activities, see, for example,

  • Richard Herring and Til Schuermann, Capital Regulation for Position Risk in Banks, Securities Firms, and Insurance Companies, in Hal S. Scott, ed, Capital Adequacy beyond
    Basel: Banking, Securities, and Insurance 15, 23–24 (Oxford 2005);
  • Robert W. Klein, The Insurance Industry and Its Regulation: An Overview, in Martin F. Grace and Robert W. Klein, eds, The Future of Insurance Regulation in the United States 13, 28
    (Brookings 2009) (observing that, with certain exceptions, “it is not clear that the insurance industry poses the kind of systemic risk to other markets as that posed by banks or
    other financial institutions”); Harrington, 76 J Risk & Ins at 804 (cited in note 8);
  • Mary A. Weiss, Systemic Risk and the U.S. Insurance Sector *2 (unpublished draft, Center for Insurance Policy & Research, Feb 23, 2010), online at http://www.naic.org/documents/
    cipr_weiss_systemic_risk_100223.pdf (visited Nov 3, 2014) (“[A]nalysis suggests that insurers are not instigators or the cause of systemic risk.”);
  • J. David Cummins and Mary A. Weiss, Systemic Risk and the U.S. Insurance Sector *30–39 (Department of Risk, Insurance, and Healthcare Management Working Paper, July 27, 2011), online at http://papers.ssrn.com/sol3/papers.cfm? abstract_id=1725512 (visited Nov 3, 2014) (finding
    that core activities of insurers pose little systemic risk, while noncore activities are more problematic).
  • In another article, one of us has also briefly endorsed this view. See Daniel Schwarcz, Regulating Insurance Sales or Selling Insurance Regulation? Against Regulatory Competition in Insurance, 94 Minn L Rev 1707, 1753–54 (2010) (arguing that insurance “generally does not create substantial systemic risks . . . [because] the availability and proper functioning of insurance is not a prerequisite to most systemically important
    economic activities”).