A stable, well-functioning financial market for allA stable, well-functioning financial market for allFI Analysis 6: Vulnerability indicators within the insurance sector
FI has identified a number of quantitative indicators that point toward factors in the insurance sector that could have an effect on financial stability. These indicators show that there was good resilience in the insurance sector at the end of the year.
Insurance firms are important players in the financial system. Life insurance firms in particular are major investors in the financial markets and an important source of funding for many market participants.
Unlike at banks, problems at insurance firms do not necessarily have a major impact on financial stability or the real economy. This is in part because they have smaller liquidity risks, but also because they are not as interconnected with the rest of the financial system as banks are.
The greatest vulnerability within the insurance sector is related to the fact that insurance firms are very large players on the financial markets. The decisions they make regarding purchases/sales of assets can amplify price fluctuations and affect the balance sheets of other firms that own the same asset. FI analyses this vulnerability as well as potential vulnerabilities that could arise if it were not possible to sign up for societally important insurance policies.
