NTNI - Nontraditional and Non-insurance

Section 2 – Elements of the Analysis

  • Question 1. Based on the above characterisation of NTNI, is the terminology “nontraditional” confusing? If so, what might be a better term than NTNI? Additionally, what might be a better term than “traditional” for products and activities that are not NTNI? Response: Yes, the term “non-traditional” could create confusion.

2016 0125 - American Academy of Actuaries Letter to IAIS - RE: Non-traditional Non-insurance Activities and Products Public Consultation Document (Nov. 25, 2015) - 9p

  • IAIS (2013) continues using the Geneva Association approach to identifying systemic risk activities and then confirming the systemically important insurers and believes that nontraditional (NT) and non-insurance (NI) financial businesses are the ones that create systemic risk in the insurance industry.
  • NTNI activities involve financial features such as leverage, liquidity or maturity transformation; imperfect transfer of credit risks (such as shadow banking); and credit guarantees or minimum financial guarantees.
    • They also involve  products that are more financially complex than traditional insurance products in the shifting of financial market risk to insurers.  (p8)

2020 02 -  Systemic Risk in China’s Insurance Industry, Society of Actuaries