Publication: Developing Insurance Markets: Insurance Companies and Infrastructure Investments
Date
2021-06
ISSN
Published
2021-06
Author(s)
Shindo, Tetsutaro
Stewart, Fiona
Abstract
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, etc.
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.
Link to Data Set
Citation
“Shindo, Tetsutaro; Stewart, Fiona. 2021. Developing Insurance Markets: Insurance Companies and Infrastructure Investments. © World Bank, Washington, DC. http://hdl.handle.net/10986/36355 License: CC BY 3.0 IGO.”