Atlas Magazine December 2008

The markets' defeat

The summer financial crisis has gradually turned into a world economic crisis. No sector of activity has been spared by the downturn which is hurting credit and mortgage establishments, banks, automobile manufacturers and many others.

The reverberations have reached the insurance business. The losses reported by insurers and reinsurers during the third quarter of the year 2008 are alarming. The fall of assets and shareholders' equity amount to hundreds of billions of dollars. Ironically, to ensure solvency, private insurers have to resort to the State in order to offset deficit and put businesses back on track.

While State's intervention stands as a solution to avoid bankruptcy, it also highlights the downsides of utter liberalism. Recourse to the State means not only a recognition of the failure of the economic pattern advocated for decades now, but also a willingness to give up part of one's authority to public powers.

In consideration of the scale of the losses, it is true that only the State has the ability to put an end to the irresponsible conduct of some shareholders and corporate leaders. It is the end of a taboo. The insurance market does need a greater intervention from the State.

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