The International Association of Insurance Supervisors (IAIS) released a policy paper titled Reinsurance and Financial Stability (reinsurance paper). This paper is a sequel to an IAIS paper titled Insurance and Financial Stability released on 15 November 2011 (insurance paper), and explores the interrelationship between reinsurance and financial stability, particularly whether traditional reinsurance-related activities contribute to financial instability and, if so, to what extent.

The main finding from the reinsurance paper is that there is little evidence that traditional reinsurance causes or amplifies financial instability. However, insurance groups that engage in non-reinsurance activities, such as credit default swaps and collateralised debt obligations may contribute to financial instability. Consequently, supervisors should strengthen cross-sector micro-prudential supervision and macro-prudential surveillance of activities identified to have systemically important potential. These findings are similar to those in the Insurance Paper.