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What Does the Current Financial Crisis Teach Us?
Wednesday, 12 November 2008
Insight Press Release

The current crisis will bring about a wholesale change in the global financial system
which has proven to be systemically weak and unstable. Not even the 1929 Wall Street
crash or the Asian crash of 1997 come close to the wide-ranging implications that the
current collapse will have on the world economy. Mr Nehemiah Neo, Managing
Director of Pan-Asian loss adjusters, VRS Insight Group, elaborates on the issue.

 

There has never been a time like the present in terms
of turmoil in the global financial system. Because
of the essentially interlinked nature of the global
economy and the financial system, what has happened in
Wall Street and Europe means the Asian economies are
directly affected.

 

From the insurance sector’s perspective, there are certainly
tough times ahead .The collapse and the government
bailout of American International Group, Inc (AIG) has
rocked our industry to its foundations.

 

Questions are being asked as to how it could happen
and whether other insurers are just as vulnerable.
There is no doubt that all over the world, hard questions
are being asked about our industry’s financial strength as
there is no letup in the financial maelstrom.

 

To be fair, insurers have so far held up well compared to banks – apart
from isolated incidents in which some insurers have placed
bets on exotic financial instruments.

 

So far, there is no indication that what has happened
to many Wall Streets banks and investment houses and
European banks will also happen to the insurance sector.
That is good news and it is to be hoped that once there are
signs the current meltdown is over next year, our industry
can begin to grow once more and particularly in Asia.
There are some important lessons from the recent financial
woes to be learned for all of us connected to the
insurance sector.

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