Regulation and intervention in the insurance industry-fundamental issues

Insurers and banks are both suppliers of financial services and constitute together thebulk of the financial services industry. As such, they share certain common traits and,consequently, are often analyzed together. At the same time, they differ markedly in certainrespects, insurance and banking being basically distinct types of businesses. Given today’strend towards an integrated financial markets supervision (in Switzerland, for example,represented by the FINMA project), it becomes all the more important to clearly sort outwhat is common and what is different.Insurers and banks both operate in the context of the capital market, a network oftrading arrangements employed by innumerable anonymous agents to exchange financialassets, i.e. claims and liabilities of various sorts. Let us begin with an, admittedly simplistic,textbook like picture of insurance, banking, and the capital market...