The Future of International Insurance Supervision in Light of the Financial Crisis

There is no discussion anymore about the nature of the financial crisis, which can be seen as the first economic and financial crisis of globalization.1 What began as a subprime crisis in the U.S. banking sector quickly turned into a full-blown credit meltdown that affected the entire financial sector and, subsequently, the real economy. The evolving crisis developments show a complex, self-reinforcing mechanism through which the different participants in the financial services industry—banking, securities, and insurance—have been affected. The financial “disease” easily spread like wildfire around the world attacking numerous institutions and jurisdictions, most of them ill-prepared for such a calamity. The multifaceted and global nature of the crisis made it more difficult to address and more intractable. After the enormous ravage in the financial sector, it quickly became clear that the real economy at large would not escape this crisis either. As the crisis progressed through different phases, many large economies across the globe fell into deep recession. Few imagined that things would spiral out of control in this way.