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...cap on insurance coverage....
...The reinsurance industry says it cannot currently price the type of localised risk that is pushing up home insurance costs and leading to reduced coverage in states like California....
...“A lot of people have chosen to become uninsured,” said Xu Yucai, a former health official in the north-western Shaanxi province....
...The US Federal Deposit Insurance Corporation stepped in at struggling institutions such as Silicon Valley Bank to backstop uninsured deposits. It now wants to recoup the cost to replenish its funds....
...A significant factor has been a sharp rise in the cost of property catastrophe reinsurance, or insurance for insurance companies....
...Although governor Ron DeSantis and Florida lawmakers in 2022 tried to stem the loss of insurance coverage, the threat of hurricanes has insurance companies rushing for the exits....
...insurance coverage at short notice....
...These costs would presumably be reflected in property and casualty insurance rates, along with many other pressures that are affecting the world right now....
...It had told S&P that its restatement had to do with “intra-company” deposits that should have been excluded from uninsured deposits....
...As extreme weather events become more common, ballooning costs from extreme weather events have pushed insurance companies to withdraw coverage in high-risk locations, as we’ve previously discussed....
...More than 94 per cent of SVB’s deposits were uninsured, the FDIC said....
...In response, insurers are restricting coverage or pulling out of some areas altogether....
...This was offset by strong trading in property and casualty insurance, which helped the company generate €4.1bn in underlying earnings....
...If a combined ratio is above 100, that means a company’s insurance business is unprofitable, or it’s paying out more in claims and operating expenses than it is earning in premiums....
...Uninsured depositors flock to the safety of their perceived too-big-to-fail status. This happened during the 2008 financial crisis when I chaired the Federal Deposit Insurance Corporation....
...The FDIC’s favoured fix, called targeted coverage, is a narrow expansion of deposit insurance to cover business payment accounts....
...One might think the DIF levies on banks would rise dramatically because of the additional insurance coverage. Not necessarily. There would be fewer bank runs for the fund to cover, for one thing....
...losses were due to the coverage of accounts larger than the $250,000 limit, and most of those accounts are in large banks....
...The Federal Deposit Insurance Corporation needs to recoup $15.8bn spent on containing bank runs. It aims to do so with a levy on uninsured deposits. Some banks are trying to game the system....
...That’s because uninsured corporate deposits were 🔥🔥🔥 before Silicon Valley Bank’s failure, but now that regulators are hinting at full deposit coverage, who knows?...
...Its 25 per cent of uninsured deposits pales in comparison with what SVB and First Republic had. Also, its clients base is substantially more diversified....
...And most banks are less likely to fail than SVB, because they have fewer uninsured depositors....
...It is not a pure play of allowing a larger set of insurance coverage. It costs the financial system significantly — and especially community banks....
...Third, regulators should change their liquidity coverage rules to prepare for faster bank runs (although that would not necessarily have protected SVB)....
...“I am much less convinced about their reliability and ability to effectively handle a casualty if something goes wrong,” said Roppestad....
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