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Could the Czech Insurance Sector Be a Source of Systemic Risk?

In: CNB Financial Stability Report 2015/2016

Author

Listed:
  • Michal Dvorak
  • Marcela Gronychova
  • Vaclav Hausenblas
  • Zlatuse Komarkova

Abstract

A debate about the systemic dimension of the insurance sector and its role in the stability of the financial system has been going on within the European System of Financial Supervision for months now. This article assesses (i) the function of this sector in the financial system and in relation to the rest of the economy, (ii) the risks which insurance companies face and which shape their business, and (iii) developments in the regulation of insurance companies (Solvency II) from the financial stability perspective. We argue that Czech insurers are not a significant source of systemic risk in the Czech Republic thanks to their focus on traditional insurance products, limited mismatch between the durations of their assets and insurance obligations, and the conservative composition of their investment portfolios. The article nonetheless identifies a number of areas where they could contribute to financial instability.

Suggested Citation

  • Michal Dvorak & Marcela Gronychova & Vaclav Hausenblas & Zlatuse Komarkova, 2016. "Could the Czech Insurance Sector Be a Source of Systemic Risk?," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2015/2016, chapter 0, pages 116-126, Czech National Bank.
    • Handle: RePEc:cnb:ocpubc:fsr1516/1
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    References listed on IDEAS

    as
    1. Jan Frait & Zlatuse Komarkova, 2011. "Financial Stability, Systemic Risk and Macroprudential Policy," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2010/2011, chapter 0, pages 96-111, Czech National Bank.
    2. Patty Duijm & Sophie Steins Bisschop, 2018. "Short-termism of long-term investors? The investment behaviour of Dutch insurance companies and pension funds," Applied Economics, Taylor & Francis Journals, vol. 50(31), pages 3376-3387, July.
    3. Zlatuse Komarkova & Vaclav Hausenblas & Jan Frait, 2012. "How To Identify Systemically Important Financial Institutions," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2011/2012, chapter 0, pages 100-111, Czech National Bank.
    4. Vilma Dingova & Vaclav Hausenblas & Zlatuse Komarkova, 2014. "Collateralization and Financial Stability," Occasional Publications - Chapters in Edited Volumes, in: CNB Financial Stability Report 2013/2014, chapter 0, pages 137-147, Czech National Bank.
    5. Patty Duijm & Sophie Steins Bisschop, 2018. "Short-termism of long-term investors? The investment behaviour of Dutch insurance companies and pension funds," Applied Economics, Taylor & Francis Journals, vol. 50(31), pages 3376-3387, July.
    6. Gollier, C., 2015. "Long-term savings: the case of life insurance in France," Financial Stability Review, Banque de France, issue 19, pages 129-136, April.
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    Cited by:

    1. Lenka PÅ™eÄ ková & Iveta PaleÄ ková, 2023. "Financial Stability of the Czech Insurance Companies," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 71(1), pages 65-86, January.

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