The Impact of the Financial Crisis on the Insurance Sector and Policy Responses

image of The Impact of the Financial Crisis on the Insurance Sector and Policy Responses

This special report assesses the impact of the crisis on the insurance sector and reviews policy responses within OECD countries. It is based to a large extent on a quantitative and qualitative questionnaire that was circulated to OECD countries in 2009. The report shows that generallythe insurance sector demonstrated resilience to the crisis, though with some variation across the OECD, and concludes with a number of policy conclusions.


Impact of the Financial Turmoil

The insurance sector played an important supporting role in the financial crisis by virtue of the role played by financial guarantee insurance in wrapping, and elevating the credit standing of, complex structured products and thus making these products more attractive to investors and globally ubiquitous.1 In addition, the narrowly avoided collapse of AIG Incorporated (AIG Inc.), viewed by some as the world’s largest insurance group consisting of a global financial service holding company with 71 U.S. based insurance companies and 176 other financial service companies, contributed to the severity of the market turmoil in September 2008. Furthermore, growing corporate insolvencies and a negative credit watch outlook caused important dislocation and retrenchment in trade credit insurance markets, which added considerable stress to business-to-business transactions and increased liquidity pressures on firms in an already liquidity-stressed environment, and thus aggravating the effects of the economic crisis.


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