The Insurance Companies and the Crisis
In developed countries the size of the insurance market is about eight to twelve percent of the GDP. In the United States the assets managed by the insurance sector are higher than the assets of the banking sector. This is one of the most important pillar of the economy and financial system. At the macroeconomic point of view, level of insurance increases the financial stability of the economy, reduce uncertainty by enabling effective risk management, and support economic activity and stimulate savings and investment. Insurance sector will also increase the efficiency of the entire financial sector by reducing transaction costs, creating liquidity and economies of scale. A modern, well-functioning insurance sector is essential for achieving sustainable economic growth.
With the advent of the global financial crisis, the economy is experiencing a very hard time. The insurance industry as well did not avoid the problems. Lack of access to deposited funds in the banks, insurance premium reduction or increase in number of claims, forced the insurance companies to a very difficult challenge - how to carry out current activities and pay due compensation? Many insurers began to lose its liquidity.
Insurance industry as one of the few propped the financial crisis at the beginning. Insurers constantly were expanding their offer - not only just for individuals but also for business companies, and were continuing decreasing the prices for life insurance. However, it does not apply to all types of the services provided by insurance companies to entrepreneurs.
Finally end of 2007 and 2008 have been rich in events associated with insurance sector. Fall in the stock market, the limitations and difficulties in accessing foreign funding, weakening the financial situation of enterprises caused rapid deterioration of the global economy and have had an impact on the financial performance of the insurance sector. Any disturbances in the banking sector directly affected the
With the advent of the global financial crisis, the economy is experiencing a very hard time. The insurance industry as well did not avoid the problems. Lack of access to deposited funds in the banks, insurance premium reduction or increase in number of claims, forced the insurance companies to a very difficult challenge - how to carry out current activities and pay due compensation? Many insurers began to lose its liquidity.
Insurance industry as one of the few propped the financial crisis at the beginning. Insurers constantly were expanding their offer - not only just for individuals but also for business companies, and were continuing decreasing the prices for life insurance. However, it does not apply to all types of the services provided by insurance companies to entrepreneurs.
Finally end of 2007 and 2008 have been rich in events associated with insurance sector. Fall in the stock market, the limitations and difficulties in accessing foreign funding, weakening the financial situation of enterprises caused rapid deterioration of the global economy and have had an impact on the financial performance of the insurance sector. Any disturbances in the banking sector directly affected the
Bibliography: * Gazeta Ubezpieczeniowa (Articles from Jan and Feb 2009) * Gazeta Wyborcza ‘Rekordowa strata AIG’, ToP, AFP, 2009-03-02 * http://www.quotes-r-us.org/home-insurance/current-financial-crisis-and-insurance-companies * http://articles.latimes.com/2009/mar/30/nation/na-aig30 * Yahoo! Finance, as of October 23, 2008. * Robert P. Hartwig, Ph.D., Insurance Information Institute, "2008—First Half Results," September 30, 2008.