Insurance: Just Part of the Financial Sector? [32]

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Bullet points include: Banks and insurers (and other components of the financial sector) are different. But also exhibit similarities which may increase over time. Substantially independent development but largely coincident implementation timing of Basel III and Solvency II introduces scope for unintended consequences in areas such as: Cost of capital. Funding patterns and interconnectedness, including linkages via sovereign debt. Product and/or risk migration, (i) between banks and insurers, (ii) between both and their customers and (iii) between both and elsewhere. Policy responses should ideally be informed by further empirical investigation into magnitude of impact of unintended consequences

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