Exclusive insight and analysis from Insurance Times, Global Reinsurance and Strategic Risk
The financial turmoil continues. A catastrophic collapse of the banking sector has been averted after hundreds of millions of dollars were injected into the sector by the world’s governments. The focus of concern has now moved to the insurance sector, with fears over insurers’ solvency levels as equity markets plunge. The global economy is teetering on the edge of recession.
Meanwhile questions are being asked about how the financial meltdown could happen. The new chairman of the FSA, Lord Turner, says financial regulators should be prepared to “wipe the slate clean” as they search for a more effective global regime. Insurers and brokers are likely to feel the brunt of the tougher regulatory regime that banks will face (page 2).
The heads of ratings agencies have been sharply criticised by members of the US House of Representatives, which accused the agencies of ignoring warning signs and following the “delirious mob” on Wall Street. Nathan Skinner argues that ratings agencies must be regulated if confidence in them is to be maintained (page 3).
The collapse of Lehman Brothers has also exposed a flaw in the operation of cat bonds as the collateral on some of Lehman’s bonds was invested in risky finance products. Reform is needed, says David Sandham (page 6).