Insurance, much more than a financial service.
Juan A. Pazo
Superintendent of Insurance, Republic of Argentina
Technological advances have provided global outreach and access to financial services, resulting in a formidable tool for inclusion. Paradoxically, local events, however insignificant they may be, have the power to create global volatility. From natural catastrophes to interest rate fluctuations, political decisions on healthcare services, immigration policy reform, stock price variations derived from compliance challenges, and the list could go on, all have a ripple effect that can alter substantially the social and economic conditions even in communities remotely located from financial centers.
The question is what have we (policy makers) done so far to build resilience in order to recover from such effects? Government has generally reacted late and inadequately. Typically, societies have relied on public sector bail outs and subsidies, which are not sustainable solutions. These “remedies” have jeopardized public finances, forcing restrictive budgetary policies that seldom create political, social and economic instability. It is now time for other economic agents to engage in providing the necessary resilience to cap the effects of such volatility, offering risk based alternatives for individuals –and communities- while safeguarding public finances and political stability.
This has been one of the drivers of our G20 Presidency and my interest in proposing the Insurance Forum 2018. Insurance can play a critical role in shaping our future society through building resilience. As one of the largest institutional investors, insurers have the capacity to pour resources into anticyclical initiatives for improving an individual’s –or an entire economic sector’s- capacity to recover from contingencies. Not only that: insurers’ unique business is that of providing resilience through their products. It is their DNA. Our challenge is to encourage market scalability as well as promoting appropriate frameworks for that to flourish. Protecting policyholders and promoting long term investments with a sustainable impact on the economy are two sides of a same coin. It is therefore crucial for insurance to be invited at the table of global policy discussions.