How to Keep the Financial Stability of Insurance on the Balance Sheet and Ways to Develop this Area

Abstract

While the insurance sector has not been the focus of financial stability institutions until recently, a number of questions have recently arisen. Indeed, the following issues have led experts to reflect on the new role being played by the insurance sector in major economic and financial balance sheets: overreaction of insurance companies during a stock market downturn, airline shutdowns following terrorist attacks on the World Trade Market. Center, the discovery of the strategic role of reinsurance in ensuring the sustainability of risk coverage, the growing influence of financial conglomerates, the transfer of credit risk from the banking sector to other sectors such as insurance and reinsurance, and temporary or long-term doubts about certain types of coverage. Against this background, it is natural to think about the potential risks of the insurance sector for national and international financial stability.

In this article, we assess the extent to which the insurance sector can be a source of systemic risk. In addition, we will take a closer look at a number of recent developments that have affected the insurance sector and may represent new sources of financial risk, as well as the role of the state in the stability or instability of the insurance sector.