. innovations in micro - insurance have helped protect our most vulnerable communities from devastation. today, drones are being used to inspect property damage claims, and machine learning to detect fraud. indeed, the industry has enabled trade to flourish, serving as the bedrock of modern economies. despite these remarkable developments, the world continues to face immense economic, environmental and social challenges. the effects of climate change are real, leaving horrific damage and destruction. economic losses in the aftermath of this year ’ s hurricane season in the gulf of mexico is estimated to reach up to $ 265 billion. events that we once thought to be implausible or highly unlikely, have become the “ new normal ”. 1 / 5 bis central bankers'speeches in many parts of the world, health care costs continue to rise, and many face uncertain futures as public sector safety nets and government finances come under increasing strain. against this backdrop, financial inclusion for the underserved segments remains an elusive goal. for the insurance industry, this raises important issues. two issues come to my mind. first is on the industry ’ s role in addressing a few of the challenges facing our economies and society. and second, the manner in which regulation and supervision can adapt to support broader economic and social development. in addressing these issues, i shall attempt to advocate the idea that a rethinking in approach is an imperative. new paradigms are needed to anchor business and public policy to the realities of the future. i will touch on three of them : competitive, stability and ethical paradigms. a new competitive paradigm in an increasingly interconnected world, traditional models of competition deserve a re - think. network effects will become more important, both in increasing the value of insurance products and services, and to better manage risks. rather than see the competitive landscape through a zero - sum lens, co - operative competition or “ co - opetition ” can result in synergistic benefits. the example of hewlett - packard ( hp ) clearly illustrates this idea. just one year after the company started operating its direct cargo trains linking china and europe, it made the bold decision to allow other producers on - board, giving up what was seen as a significant competitive advantage at the time. but the results were astonishing. by doing so, it was able to increase the frequency of departures which allowed it to move its products more quickly to europe. today, hp ’ s europe - bound trains depart daily from china, with the higher frequency working to its own

##ence of risk from more regulated to less regulated institutions and activities. indeed, part of the shifting of activities outside the banking sector is likely stemming from a reaction to the regulatory action on banks. to avoid that the increase in market - based financing becomes a serious source of systemic risk, macroprudential regulation also needs to apply to the non - banking sector. the need for macroprudential regulation of certain financial market activities becomes clear if we consider that banks and non - banks are closely tied through market - based intermediation activities. these include a broad array of services related to securitisation transactions, securities financing transactions, repos, collateral management and derivatives – allowing for risk transformation and exchange via swaps and other instruments. 11 these activities can be conducted by regulated banks or by other less regulated institutions, but most of these activities escape the monetary statistics and the flow - of - funds accounts – they can, therefore, hardly be monitored, which is why they are called shadow banking activities. but risks of regulatory arbitrage are sizeable, as many of the activities can be conducted by different types of institutions subject to diverse regulatory regimes. additionally, the more effective we are in using macroprudential tools for banks, the more likely activities spill over into the less regulated sector. these instruments represent an important share of financial assets. according to estimates by the european securities and markets authority ( esma ) aggregate european abcp, abs, repo, securities lending and mmfs is totalling more than eur 8tn, which represents 19 % of bank liabilities. the largest part thereof is the repo market with an estimated size of eur 6tn. bis central bankers ’ speeches past experience has indeed shown that financial conditions can easily spill - over from one part of the financial system to the other. to give an example, before the global crisis, the markets for money - like claims were boosted by the emergence of very sizeable cash pools as these could possibly not find safety in banks ’ insured deposits. according to the academic literature, collateral markets, such as repo and derivative margins, played a decisive role in these developments, 12 where the role of bankruptcy privileges is noted as a key feature of the secured funding model. 13 such markets can be of concern from a macroprudential perspective, especially if they are contributing to the financial cycle or if they create additional risks. recent analytical studies – largely based on empirical studies on us markets – suggest that