1 improving transparency in the insurance sector: progress made and outstanding challenges...
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Improving transparency in the insurance sector: progress made and outstanding challenges
OECD-ASSAL Regional Expert SeminarMontevideo, 26-27 September 2013
Timo BroszeitMonetary & Capital Markets Department
International Monetary Fund
This Presentation should not be reported as representing the views of the IMF.The views expressed in this presentation are those of the author and do not necessarily
represent those of the IMF, its Management, or its Executive Board.
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• Introduction
• G20 Data Gaps Initiative: Overview and Objectives
• G20 Data Gaps Initiative: Recent Progress
• Outstanding Challenges
Agenda
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Introduction
Financial crisis made data gaps more obvious than ever
Cross-border exposures
Interconnectedness
Risk concentrations
Tail risks
Derivatives
Credit default swaps
Leverage
Real estate prices
Public sector debt
Liquidity
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• Introduction
• G20 Data Gaps Initiative: Overview and Objectives
• G20 Data Gaps Initiative: Recent Progress
• Outstanding Challenges
Agenda
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G20 Data Gaps Initiative: Overview
• April 2009: G20 Finance Ministers and Central Bank Governors call FSB and IMF to explore gaps and provide proposals for strengthening data collection
• October 2009: FSB/IMF set up list of 20 recommendations, endorsed by G20 Finance Ministers and Central Bank Governors
• Annual progress reports by FSB and IMF (most recent: September 2013)
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G20 Data Gaps Initiative: Overview
Conceptual / statistical framework needs development
Conceptual / statistical framework exists and ongoing collection needs enhancement
Build-up of risk in the financial sector
#3 (Tail risk in the financial system and variations in distributions of, and concentrations in, activity)#4 (Aggregate leverage and maturity mismatches)#6 (Structured products)
#2 (Financial Soundness Indicators (FSIs))#5 (Credit default swaps)#7 (Securities data)
Cross-border financial linkages
#8 and #9 (Global network connections and systemically important global financial institutions)#13 and #14 (Financial and non-financial corporations cross-border exposures)
#10 and #11 (International Banking Statistics (IBS) and Coordinated Portfolio Investment Survey (CPIS))#12 (International Investment Position (IIP))
Vulnerability of domestic economies to shocks
#16 (Distributional information) #15 (Sectoral accounts)#17 (Government finance statistics)#18 (Public sector debt)#19 (Real estate prices)
Improving communication of statistics
#20 (Principal global indicators)
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G20 Data Gaps Initiative: Overview
A myriad of institutions working on these recommendations:
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G20 Data Gaps Initiative: Objectives
• Agenda with regard to insurance statistics:• Recommendation #2: Expand list of FSIs, incl. non-banks• Recommendation #3: FSIs - implementation of measures that cover tail
risks, concentrations, variations in distributions, volatility of indicators• Recommendation #4: FSIs - Develop measures of aggregate leverage and
maturity mismatches in the financial system• Recommendation #8: Interlinkages between SIFIs• Recommendations #10 and #11: Coordinated Portfolio Investment
Survey (CPIS)• Recommendation #13: Cross-border exposures• Recommendation #14: Standardized template covering international
exposures of large nonbank financial institutions• Recommendation #15: Sectoral accounts, in particular nonbank financial
institutions
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• Introduction
• G20 Data Gaps Initiative: Overview and Objectives
• G20 Data Gaps Initiative: Recent Progress
• Outstanding Challenges
Agenda
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G20 Data Gaps Initiative: Recent Progress
• G-SIFIs:• First template for G-SIBs finalized
• Phase 1 started in March 2013 (consolidated data on bilateral counterparty credit exposures and aggregated exposures)
• Phases 2 and 3 will progressively expand and enhance template• Data hub at the BIS
• Cross-border exposures:• Pilot exercise to set up an inventory of existing data on cross-border
positions
• CPIS:• Semi-annual (instead of annual) data collection since June 2013
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• Introduction
• G20 Data Gaps Initiative: Overview and Objectives
• G20 Data Gaps Initiative: Recent Progress
• Outstanding Challenges
Agenda
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Outstanding Challenges
• Expansion of FSIs which currently include: • 25 indicators for deposit takers• 2 indicators for other financial corporations
• assets to total financial system assets• assets to GDP
• 5 indicators for nonfinancial corporations• 2 indicators for households• 2 indicators for market liquidity• 4 indicators for real estate markets
• Quarterly reporting of FSIs
• Main challenge: which valuation framework?=> comparison across countries difficult!
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Outstanding Challenges
• G-SIFI data collection to include G-SIIs:• Main challenge (again…): which valuation framework?
=> comparison across companies difficult!
• Finally, some remarks on confidentiality:• Some reluctance with regard to sharing data with IMF, BIS and other
multilateral institutions• BIS data hub works under strict confidentiality safeguards• Even data sharing at bilateral or regional level can improve supervision!
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Outstanding Challenges (beyond G20 DGI)
• Consolidated data• Highest level of consolidation, incl. (non-financial) holding companies
• Data sharing between home and host authorities• Some more technical stuff:
• Interconnectedness with the banking sector• Direct exposures (bonds, equity, deposits, repos…)• Common exposures
• Asset-liability matching, interest rate sensitivities• Technical provisions
• Risk mitigation (reinsurance, hedging, securitization)• Modeling of catastrophe losses
• Pricing patterns and (re)insurance cycle
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Outstanding Challenges
Probably the biggest challenge…
