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Business and Economics > Insurance

You are looking at 1 - 10 of 13 items for :

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Cover IMF Working Papers
Cyber Risk, Market Failures, and Financial Stability
Emanuel Kopp
,
Lincoln Kaffenberger
, and
Christopher Wilson
Cyber-attacks on financial institutions and financial market infrastructures are becoming more common and more sophisticated. Risk awareness has been increasing, firms actively manage cyber risk and invest in cybersecurity, and to some extent transfer and pool their risks through cyber liability insurance policies. This paper considers the properties of cyber risk, discusses why the private market can fail to provide the socially optimal level of cybersecurity, and explore how systemic cyber risk interacts with other financial stability risks. Furthermore, this study examines the current regulatory frameworks and supervisory approaches, and identifies information asymmetries and other inefficiencies that hamper the detection and management of systemic cyber risk. The paper concludes discussing policy measures that can increase the resilience of the financial system to systemic cyber risk.
Keywords:
WP; financial system; economic risk; preferred risk profile; business model; firms visibility; Cyber risk; systemic risk; cyber insurance; cyber regulation; risk management; information asymmetries; market failure; financial services firm; liability insurance; firms' customer; market risk shock; cybersecurity provider; risk assessment; data loss; cybersecurity risk; customer notification; breach customer security; Operational risk; Insurance; Financial sector; Global
Cover Global Financial Stability Report, April 2016
Global Financial Stability Report, April 2016
Potent Policies for a Successful Normalization
International Monetary Fund. Monetary and Capital Markets Department

Abstract

The current Global Financial Stability Report (April 2016) finds that global financial stability risks have risen since the last report in October 2015. The new report finds that the outlook has deteriorated in advanced economies because of heightened uncertainty and setbacks to growth and confidence, while declines in oil and commodity prices and slower growth have kept risks elevated in emerging markets. These developments have tightened financial conditions, reduced risk appetite, raised credit risks, and stymied balance sheet repair. A broad-based policy response is needed to secure financial stability. Advanced economies must deal with crisis legacy issues, emerging markets need to bolster their resilience to global headwinds, and the resilience of market liquidity should be enhanced. The report also examines financial spillovers from emerging market economies and finds that they have risen substantially. This implies that when assessing macro-financial conditions, policymakers may need to increasingly take into account economic developments in emerging market economies. Finally, the report assesses changes in the systemic importance of insurers, finding that across advanced economies the contribution of life insurers to systemic risk has increased in recent years. The results suggest that supervisors and regulators should take a more macroprudential approach to the sector.

Keywords:
GFSR; commodity; emerging market economy; monetary policy; reform; financial condition; market liquidity risk; revenue diversification; reform agenda; risk appetite; services market; emerging market economies; heightened market volatility; fiscal policy setting; Emerging and frontier financial markets; Insurance companies; Spillovers; Insurance; Systemic risk; Global; North America; Europe; Middle East; Africa; equity price; equity market spillover; cross-asset correlation; return on equity; index weight; emerging market economy assets; asset portfolio
Cover IMF Staff Country Reports
Canada: Financial Sector Assessment Program-Impact on the Insurance Sector of a Low Interest Rate Environment-Technical Note
International Monetary Fund. Monetary and Capital Markets Department
This paper discusses Canada’s Financial Sector Assessment Program (FSAP) impact on the insurance sector of a low interest rate environment. It highlights that actuarial standards on valuation of liabilities require that assumed reinvestment rates take increasing account of current market rates that led to higher liabilities as low rates persisted. The note outlines the effect of Canadian accounting and actuarial standards that further increases in liabilities need to be recognized in the short term. Policy measures have been undertaken by Office of the Superintendent of Financial Institutions (OSFI) in the banking sector to address broader risks.
Keywords:
ISCR; CR; firm; interest rate; return; product; life company; company report; rate change; reinvestment rate; companies' market shares; design regulation; companies' inability; interest rate scenario; company's liability; wealth management products; Insurance; Insurance companies; Personal income; Accounting standards; Capital adequacy requirements; Europe; North America; Asia and Pacific; Global
Cover IMF Staff Country Reports
Switzerland: 2009 Article IV Consultation: Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Switzerland
International Monetary Fund
Switzerland is affected by the global crisis through the stock effect, the flow effect, and the trade effect. Along with a sharp contraction in exports, investments are now being postponed. Consumption has held up well so far, but as unemployment rises, household spending will lose momentum. The Swiss National Bank has appropriately loosened monetary policy, bringing the policy rates almost to zero. Maintaining financial stability will be essential for ensuring macroeconomic stability and growth in Switzerland.
Keywords:
ISCR; CR; Switzerland; introduced SNB bill; repo transaction; asset; SNB balance sheet; monetary policy stance; IMF staff projection; headline inflation; Financial sector; Income; Insurance companies; Insurance; Global; Asia and Pacific
Cover IMF Working Papers
Institutional Quality, Knightian Uncertainty, and Insurability: A Cross-Country Analysis
Mr. S. Nuri Erbas
and
Chera L. Sayers
Knightian uncertainty (ambiguity) implies presence of uninsurable risks. Institutional quality may be a good indicator of Knightian uncertainty. This paper correlates non-life insurance penetration in 70 countries with income level, financial sector depth, country risk, a measure of cost of insurance, and the World Bank governance indexes. We find that institutional quality-transparency-uncertainty nexus is the dominant determinant of insurability across countries, surpassing the explanatory power of income level. Institutional quality, as it reflects on the level of uncertainty, is the deeper determinant of insurability. Insurability is lower when governance is weaker.
Keywords:
WP; insurance coverage; insurability; life insurance
Cover IMF Working Papers
Can the Private Annuity Market Provide Secure Retirement Income?
Miss Allison C Schrager
and
Mr. George A Mackenzie
Annuity premiums are often assumed to be constant, although they can be expected to vary with the yield curve. Variations in premiums will become an important public policy issue as defined-contribution (DC) pension plans play an increasingly prominent role in providing retirement income. As DC plan holders retire, many will annuitize at least a part of their account balances. In the absence of current data on annuity prices, the paper relies on U.S. Treasury interest rate data to simulate the impact of interest rate variation on annuity premiums. For a spectrum of feasible interest rates, the variation in retirement income is not negligible.
Keywords:
WP; annuity; annuity premium; annuity market; Public pension systems; individual accounts; annuities; annuity literature; staggered annuity purchase; market result; annuity diversification; annuity provider; annuity payment; Insurance; Insurance companies; Pensions; Yield curve; Personal income; Europe
Cover IMF Working Papers
Macroeconomic Implications of Natural Disasters in the Caribbean
Mr. Tobias N. Rasmussen
Each year natural disasters affect about 200 million people and cause about $50 billion in damage. This paper compares the incidence of natural disasters across countries along several dimensions and finds that the relative costs tend to be far higher in developing countries than in advanced economies. The analysis shows that small island states are especially vulnerable, with the countries of the Eastern Caribbean standing out as among the most disaster-prone in the world. Natural disasters are found to have had a discernible macroeconomic impact, including large effects on fiscal and external balances, pointing to an important role for precautionary measures.
Keywords:
WP; ECCU country; country; GDP; government; market; price; Natural Disasters; Eastern Caribbean; Developing Countries; ECCU insurance market; countries of the Eastern Caribbean Currency Union; island state; market insurance; Insurance; Personal income; Fiscal stance; Caribbean; Global
Cover Taxing the Financial Sector
Taxing the Financial Sector
Concepts, Issues, and Practice
Mr. Howell H Zee

Abstract

One of the most complex issues in tax policy today is the treatment of the institutions, products, and services that make up the financial sector. It can be harder to ascertain income, expenses, and profits for financial firms than for firms selling goods and services, and it is easier for individuals and firms to manipulate financial transactions so as to exploit tax loopholes. This volume explores the challenges faced by tax policymakers and identifies modern best practices in several areas: banks, insurance companies, securities companies, investment funds, pension funds, and derivatives.

Keywords:
BOOK; VAT; bank; capital gain; taxation; tax treatment; securities transaction tax; credit-invoice VAT; value-added tax; tax relief; general tax principle; arbitrage opportunity; Personal income; Insurance; Value-added tax; Income tax systems; Africa; Australia and New Zealand; Europe
Cover IMF Working Papers
The Role of Private Sector Annuities Markets in an Individual Accounts Reform of a Public Pension Plan
Mr. George A Mackenzie
Pension reforms that establish individual accounts will diminish the relative importance of the traditional state pension while creating a significant role for individual accounts in providing income for retirement. This paper surveys the policy issues this new role entails. It offers general advice to countries considering such issues as the restrictions to be placed on the timing, extent, and form of withdrawals from individual accounts and the need for mandatory annuitization (conversion into annuities) of accumulated account balances. The paper also considers the role that private annuity markets should play and related regulatory, social safety net, tax, and administrative questions.
Keywords:
WP; annuities market; private sector; annuity payment; indexed annuity; life insurance company; Public pension reform; individual accounts; annuity markets; replacement ratio; deferred annuity; Insurance; Insurance companies; Pensions; Pension spending; Personal income; South America
Cover IMF Working Papers
The Insurance Role of Social Security: Theory and Lessons for Policy Reform
Mr. Victor Hugo Valdivia
This paper examines the impact of social security on welfare. The provision of social security reduces precautionary savings and encourages early retirement. Consequently, it lowers aggregate capital, employment, output, and consumption. On the other hand, it also provides old age insurance. This trade-off is examined using a life-cycle general equilibrium model. The paper finds that the current U.S. Social Security system can improve welfare even though the levels of aggregate output, employment, capital, and consumption fall relative to their levels without such a system. The welfare gains arise from insurance against living much longer than expected.
Keywords:
WP; early retirement; adverse selection; Social Security; Public Finance; Computable General Equilibrium; welfare gain; earnings profile; Social Security benefit; impact of Social Security; consumption decision rule; insurance value; Securities; Insurance; Aging; Retirement; Consumption