Developing Insurance Markets : Insurance Companies and Infrastructure Investments / Tetsutaro Shindo.

Format:

Book

Government document

Author/Creator:

Shindo, Tetsutaro.

Contributor:

Stewart, Fiona.

Series:

Other Financial Accountability Study.

World Bank e-Library.

Language:

English

Subjects (All):

Capital Markets and Capital Flows.

Finance and Development.

Finance and Financial Sector Development.

Financial Regulation.

Financial Regulation and Supervision.

Infrastructure Economics and Finance.

Infrastructure Finance.

Infrastructure Investment.

Insurance.

Insurance and Risk Mitigation.

Local Subjects:

Capital Markets and Capital Flows.

Finance and Development.

Finance and Financial Sector Development.

Financial Regulation.

Financial Regulation and Supervision.

Infrastructure Economics and Finance.

Infrastructure Finance.

Infrastructure Investment.

Insurance.

Insurance and Risk Mitigation.

Other Title:

Developing Insurance Markets

Place of Publication:

Washington, D.C. : The World Bank, 2021.

System Details:

data file

Summary:

Higher insurance penetration and smaller infrastructure investment gaps has been correlated even after accounting for gross domestic product (GDP) levels, which indicates the insurance industry may have made some contributions to this development. Insurers have been promoting infrastructure investments as both asset owners and asset managers because this asset class makes sense from an asset liability management (ALM) viewpoint and they can leverage their asset management function. The stable and long-term cash flows of infrastructure assets naturally align with liabilities of insurers, particularly life insurers. Creating an ecosystem around infrastructure finance and different types of market players is of high importance. In a developing country where banks are already dominant in infrastructure financing and a risk-based framework for the banking sector constrains them from providing long-tenor financing, the roll-over model can work. Finally, governments and national supervisors can support infrastructure investments in several ways, including establishing a clear definition for infrastructure and compiling data, lowering capital charges on infrastructure investments (if their different treatment is evidence-based), facilitating credit enhancement mechanism and the increase of investible infrastructure projects, et cetera In some cases, more clarity may be required on capital charges between infrastructure and securitized assets. Restrictions on direct investments to infrastructure can also be lifted under appropriate risk-based supervision in place unless being harmful to the interests of policyholders.