A confidential document leaked last week has revealed a proposal by the International Monetary Fund (IMF) to impose a tax on banks to fund future bailouts.

The proposed tax comprises a “financial stability contribution”, which is a flat fee on non-insured liabilities, a levy to fund any future government support and a “financial activities tax” on the profits and remuneration of financial institutions.

The document was prepared by the IMF for the G20 meeting of finance ministers in Washington at the end of last week.

The full details of the proposal remain unclear, including whether the tax would apply just to banks or more widely to financial institutions, including insurers.

Regardless, the New York-based Insurance Information Institute (III) has come out strongly against the imposition of any such tax on insurers.

III President Robert Hartwig says imposing the tax on insurers would be a policy error in light of the sector’s quick recovery from the financial crisis.

“Bank-style regulation would needlessly raise insurance costs for hundreds of millions of insurance consumers and could unfairly require insurers to subsidise the reckless lending practices and speculative activities of failed banks,” he said.

The Association of British Insurers has also voiced opposition to imposing the tax on insurers, with Director-General Kerrie Kelly saying any measures adopted to secure the financial system need to be focused where the risks are.

“Insurers were not a source of failure and their business model means they are not subject to the types of credit and liquidity risks that destroyed so many banks,” she said.

“Any inclusion of insurers within the scope of levies designed to impact on banks is essentially inappropriate and not justified.”