Financial Stability Review

Abstract

Over the past three years or so, concerns about financial instability have been focused primarily on vulnerabilities generated within the banking sector, particularly in the major economies. Recent natural disasters in Australia, New Zealand and Japan, as well as the unrest in North Africa and the Middle East, have redirected some attention to the resilience of the financial system to shocks from outside it. Information available to date suggests that the costs to Australian insurers of the recent disasters are within the sector’s capacity to absorb them. For global insurers, the financial effects of the Japanese earthquake and tsunami are likely to be more severe, but will take some time to evaluate.