City Research Online

The Contribution of Shadow Insurance to Systemic Risk

Leong, S. H., Bellavite Pellegrini, C. & Urga, G. ORCID: 0000-0002-6742-7370 (2020). The Contribution of Shadow Insurance to Systemic Risk. Journal of Financial Stability, 51, article number 100778. doi: 10.1016/j.jfs.2020.100778


Shadow insurance is a regulatory loophole exploited by certain insurance groups to increase risk exposure, potentially destabilising the financial system. In this paper, we evaluate the contribution of shadow insurance to systemic risk of the global financial sector using a sample of 215 international insurance entities covering the 2004--2017 period. We detect shadow insurance by examining every reinsurance agreement on the Schedule S filings. Using both ΔCoVaR and SRISK measures, we find that the practice of shadow insurance is a significant driver of global systemic risk.

Publication Type: Article
Additional Information: © 2020. This manuscript version is made available under the CC-BY-NC-ND 4.0 license
Publisher Keywords: Financial stability; Interconnectedness; Shadow banking activity; Size.
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD61 Risk Management
H Social Sciences > HG Finance
Departments: Bayes Business School > Finance
SWORD Depositor:
[thumbnail of JFS201987_F_Manuscript.pdf]
Text - Accepted Version
Available under License Creative Commons Attribution Non-commercial No Derivatives.

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