AXA SA, France’s biggest insurer, said plans to impose tighter capital rules on too-big-to-fail insurers will pose a new hurdle to European growth and do little to bolster financial stability.

Insurance companies don’t present the same risk to the global economy as banks because they often share investment risk with clients and don’t leverage their capital, said Christian Thimann, head of AXA’s strategy and public affairs.

“Going further with capital surcharges could impact the long-term financing of the economy,” he said in an interview in Paris. “There are better ways to control systemic risk in insurance than through capital surcharges.”

Global regulators say large insurers need to be treated differently as their failure could cause widespread disorderly disruptions to financial markets, as happened with AIG’s near-collapse and bailout in 2008. The Financial Stability Board, set up by the Group of 20 nations, published a list of nine institutions deemed systemically important in July 2013.

MetLife Inc., also among the nine firms, sued the U.S. government in January over a decision to label it critical to the economy. Imposing higher regulatory standards will drive up the cost of protection for consumers, it said.

Absorbing Losses

AXA is voicing industry concern less than three months before the new capital rules come up for discussion at the FSB’s June consultation, Thimann said. The FSB, which gathers regulators and central bankers from the G20, aims to define by year-end higher loss-absorption rules for the nine institutions, including AXA, to be introduced from 2019.

Europe’s economic growth is seen picking up this year after the European Central Bank pledged 1.1 trillion euros ($1.2 trillion) in asset purchases and oil prices and the euro fell. The European Commission is also planning to help boost growth by attracting private investors, including insurers, to a 300 billion-euro program for multi-year infrastructure projects such as a high-speed train link between France and Italy.

Insurers typically raise capital from policies and invest it in products such as bonds, stocks and infrastructure.

U.K. insurers Aviva plc and Prudential plc, and Allianz SE, Europe’s biggest insurer, are the other European insurers classified by the FSB as too big to fail. The firms also include AIG and Prudential Financial Inc.

Systemic Risk

Instead of tightening capital requirements, regulators should instead focus “on identifying the right activities that could give rise to systemic risk and then develop the right policy instruments,” Thimannn said. The FSB, based in Basel, has already set up capital buffers for global systemically important banks.

Thimann, formerly a top adviser to ECB President Mario Draghi, joined AXA at the start of last year. He declined to comment on ECB policy making.

“Insurers are not permanently refinancing themselves on the financial markets, neither vis-à-vis a central bank, and leverage is quasi-absent in insurance,” Thimann said. “Savings contracts with risk-sharing from clients also represent a significant part of an insurer’s balance sheet, enhancing their loss-absorption capacity.”

From this year, insurers will report a “basic capital requirement” ratio to their supervisor on a confidential basis. The FSB’s loss absorbency rules, which come on top of these basic capital requirements for the nine firms, will then be built upon straightforward “backstop” capital for all group activities that must be of the “highest quality,” the FSB said in 2013 when setting out the measures.