The life insurance industry’s transformation: financial stability implications
Gaston Gelos and Frank Packer examine an industry that is increasingly complex and interconnected
For decades, insurance companies were regarded as relatively safe players in the financial system – reliable institutions that collected premiums, invested cautiously, and paid out claims over long periods. Unlike banks, they faced little risk of sudden runs on deposits because their customers’ contracts locked in long-term guarantees. The near-failure of US insurer AIG in 2008 due to excessive exposure to collateralised debt obligations, securities lending and insufficient risk controls was
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