City Research Online

The Contribution of Shadow Insurance to Systemic Risk?

Urga, G., Leong, S. H. and Bellavite Pellegrini, C. (2019). The Contribution of Shadow Insurance to Systemic Risk?. .

Abstract

Shadow insurance is a regulatory loophole exploited by certain insurance groupsto increase risk exposure, potentially destabilising the entire financial system. Inthis paper, we evaluate the contribution of shadow insurance to systemic risk ofthe global financial sector using a sample of 215 publicly traded insurers world-wide over the period 2002 - 2017. We detect shadow insurance by examining allreinsurance agreements on the Schedule S filings. Using ∆CoV aRandSRISKmeasures, we find that the practice of shadow insurance is a significant driver ofglobal systemic risk.

Publication Type: Monograph (Working Paper)
Publisher Keywords: Systemic risk; Shadow insurance; Interconnectedness.
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
H Social Sciences > HG Finance
Departments: Cass Business School > Finance
URI: https://openaccess.city.ac.uk/id/eprint/23248
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