Credit Crisis and Insurance Comment for Web 141108pl

SC 1 Insurance and Finance Research on Finance Issues in Insurance Credit Crisis and Insurance – A Comment on the Role of the Industry By Patrick M. Liedtke, Secretary General and Managing Director, The Geneva Association This article was published on The Geneva Association’s website on 14 November 2008 At the time of writing this article, the credit crisis that has had its origins in the subprime markets in the US is more than a year old and has spread to other countries and other asset classes as well as the wider economy with a vengeance. Already last year, when some banks and financial guarantors began running into severe (and in some cases ultimately bankruptcy-triggering) shortages of liquidity, The Geneva Association wondered about the risks that this financial crisis might pose to the insurance industry. In January 2008, we started to discuss the issue with our members and several Geneva Association expert networks, among them our Amsterdam Circle of Chief Economists. In the process, a dedicated working group of chief economists from some leading international insurance companies set out to analyse the crisis and carry out joint work that would provide special insights into the nature of the credit crisis and its consequences for insurance. At the centre of the endeavours of this working group are the following sets of questions: • What happened in the financial markets? What were the origins of the crisis, what ...