This paper stresses that the present financial crisis may be regarded as a banking crisis, but there are hardly any possibilities of the solvency of the insurance industry. However to a certain extant the insurance industry on a whole has been affected by the ongoing financial crisis. To be more specific the insurance companies which are mainly involved in the real estate insurance also got hugely impacted. Mostly there have been adverse effects were adverse for the companies. The financial crisis had a visible impact on the insurance companies, principally due to their investment portfolio. Meanwhile as the crisis further spread, the valuations of the financial market worsened drastically. Apart from that a number of strenuous exposures were also reveled in the form of market and credit risks.
This report makes a conclusion that the real estate insurance companies, during the midst of the crisis period were finding it difficult to sustain, due to extreme downward pressure. The real estate insurance companies are generally large investors and they highly depend upon the long term investment prospect, unlike banks and other financial institutions. Owing to the fact that declining household income reduces the demand of various products, similarly the demand of real estate insurance has greatly reduced due to the crisis. Furthermore, the financial crisis has also abridged activities pertaining to real estate. This has automatically minimized the need of the real estate insurances. Thus it can be concluded that the ongoing financial crisis did impacted the insurance companies which insured real estate to a large extant. ...Show more