The Need For Transparency and Consistency In The Designation Process Of Global Insurers

The average American couldn't pick the Financial Stability Board (FSB) out of a lineup. But every fall this shadowy group of international regulators makes decisions that have a crucial impact on their lives. This year's announcement on November 3rd added Aegon, the Dutch financial conglomerate and parent of U.S. insurer Transamerica, to the list of too big to fail financial companies. Formally, Aegon joins eight other insurance companies on the FSB's list of Global Systemically Important Insurers (G-SIIs).

Being named a G-SII launches a company into an entirely new realm of capital requirements, liquidity requirements, and other features of the regulatory web. This makes operations more costly, and products more expensive. Given that, you would think it would be clear who is, and who is not, a G-SII and why. But it has never been clear why the FSB and its U.S. arm, the Financial Stability Oversight Council (FSOC), make the decisions they do.

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