The term “too big to fail” rose to prominence in the wake of 2008’s economic recession. Much like the effects of the recession, the phrase has lingered and has come to define certain aspects of the business world. Too big to fail is a categorization often attributed to massive corporations that have complex and expansive global business operations and deep ties with financial institutions. If these businesses were to fail, there may be disastrous implications for the global economy that go well beyond the problems born during the 2008 recession.
The International Association of Insurance Supervisors (IAIS), which has been conducting a study on which insurance companies are pivotal to the world’s economy, have announced that the rules governing these insurance organizations must be different than the rules governing their counterparts in the banking industry. According to the IAIS, the rules in place to protect massive financial institutions would serve as a detriment to the world’s large insurance corporations, adding to the financial problems faced by both industries.
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The IAIS is working with insurance officials from corporations and national governments to determine how the world’s insurance industry should be protected. These rules are expected to be ready in time for the G20 meeting that will take place in Mexico next year. World leaders will review the rules and grant their approval or propose changes. The rules are being drafted to ensure that companies are able to protect themselves from any financial catastrophes that happen in the future.