Had it not been for the insurer AIG, the insurance industry might have escaped some of the ugliness of the recent financial crisis that hit the entire financial services industry.
“AIG was the king of credit default swaps,” says Jonathon Steiman, analyst, financial services technology for Datamonitor. “It flew high on them and crashed hard on them.”
However, what bothers insurers is–whether there had been federal regulation of the insurance industry or the current state regulation–insurance regulations as we know them would not have been able to prevent this. “[The AIG mess] was outside of traditional insurance regulation,” he says.
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