FSA sets up insurance crisis team
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LONDON – According to newspaper reports, UK regulator the Financial Services Authority (FSA) has appointed an external team of lawyers to deal with crises it expects in the insurance sector.
Although the Bank of England stated this week that the insurance sector is stable and does not share banks’ liquidity problems, it noted some firms could be forced to sell assets due to credit rating downgrades or falling solvency levels.
The FSA is, along with government departments, looking at ways to potentially deter forced equity selling by insurance firms should the insurance sector be further threatened by falls in the price of equities and corporate bonds. It wants to avoid forced sales of equities into an already severely depressed market and could look again at relaxing rules on the amount of capital requirements for insurers or suspend mark-to-market accounting.
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