The Insurance Industry and Systemic Risk: Evidence and Discussion

Networks Financial Institute Policy Brief No. 2010-PB-02

40 Pages Posted: 21 Apr 2010

See all articles by Martin F. Grace

Martin F. Grace

Temple University - Fox School of Business & Management

Date Written: April 2010

Abstract

The financial market events in September 2008 seem unprecedented in modern times. While other systemically important events happened in the last thirty years affecting U.S. markets, the one month turmoil and government response is without equal. As a result, insurance industry economists have been dusting off dictionaries and looking up what systemic risk really means. Further, there are other policy analysts who are linking the insurance industry to systemic risk with a potential goal of changing the governmental level at which the entire industry is regulated. Systemic risk and the role insurers play in the market is of concern to both state regulators and Congress. This paper presents evidence regarding systemic effect of insurers and will discuss this in light of the rationale for federal regulation of the insurance industry.

Keywords: Systemic Risk, Insurance Industry, American International Group (AIG)

JEL Classification: G2, G22

Suggested Citation

Grace, Martin F., The Insurance Industry and Systemic Risk: Evidence and Discussion (April 2010). Networks Financial Institute Policy Brief No. 2010-PB-02, Available at SSRN: https://ssrn.com/abstract=1593645 or http://dx.doi.org/10.2139/ssrn.1593645

Martin F. Grace (Contact Author)

Temple University - Fox School of Business & Management ( email )

Fox School of Business and Management
1301 Cecil B. Moore Ave.
Philadelphia, PA 19122
United States

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