The Contribution of Shadow Insurance to Systemic Risk

Carlo Bellavite Pellegrini, Soon Heng Leong, Giovanni Urga

Research output: Contribution to journalArticle


Shadow insurance is a regulatory loophole exploited by certain insurance groups to increase risk exposure, potentially destabilising the financial system. In this paper, we evaluate the contribution of shadow insurance to systemic risk of the global financial sector using a sample of 215 international insurance entities covering the 2004–2017 period. We detect shadow insurance by examining every reinsurance agreement on the Schedule S filings. Using both ΔCoVaR and SRISK measures, we find that the practice of shadow insurance is a significant driver of global systemic risk.
Original languageEnglish
Pages (from-to)1-20
Number of pages20
JournalJournal of Financial Stability
Publication statusPublished - 2020


  • Financial stability
  • Interconnectedness
  • Shadow banking activity
  • Size


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