The Geneva Association has called on members of the G20 group to separate insurance from the banking industry when looking at systemic risk.

The insurance think tank has written to the finance ministers and central bank governors of the G-20 countries calling on them to recognise various reports stating insurance companies do not have the same systemic risk as banks.

“Financial regulators and the International Association of Insurance Supervisors have recently stated publicly that traditional insurance activities do not give rise to systemic risk,” the letter from Geneva Association President Nikolaus von Bomhard and Secretary Patrick Liedtke says.

“It would be helpful if the G20 could formally recognise what is now conventional wisdom among experts and state clearly that any non-core insurance activities will be dealt with based on the particular business model and role of insurance.”

The association also wants existing and proposed regulation of the insurance industry to be noted as this also deals with systemic risk.

“Simplistic regulatory answers, in particular a direct and crude transfer of banking regulation into the insurance sector, will impair the insurance industry’s capacity to play its economic role,” the letter says.

“As many decades without a single systemic financial crisis being triggered by any insurance activity have demonstrated, the insurance industry is well placed to support economic development and growth.”

The association argues the insurance industry has a proven ability to withstand shocks due to its long-term investment strategies and it has no need for extra capital at this time, unlike many banks.

Insurance has not been put on the G-20 summit agenda, but the association hopes its proposal will be looked at when the ministers discuss bank capital levels.

It warns if insurers are included in new tougher measures, “it could potentially undermine the positive contribution of (the insurance) industry to economic development and growth”.