LONDON (Reuters) – Proposed curbs on insurers aimed at preventing a repeat of AIG's 2008 taxpayer bailout could raise the cost of insurance, making more people dependent on the state, a finance sector lobby group said.

"As currently designed, there is a high risk of detrimental unintended consequences," the Institute of International Finance (IIF) said on Monday.

Under draft proposals published in October, big insurers involved in risky activities beyond their core business, such as derivatives investment, would have to hold extra capital.

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