Italy is on the verge of a financial meltdown, which may have dire ramifications for the global economy. Investors and financial institutions have begun casting doubt on Italy’s ability to survive a financial disaster, and now the government is turning to the insurance industry for help. Italian officials are looking to adopt disaster insurance to help mitigate the impact of a potential economic catastrophe. The country’s debt – more than $2 trillion – could mean that it is beyond rescue, even for the insurance industry.
The insurance industry in Europe has been working with the European Union on a way to solve the crisis currently plaguing the region. The EU has plans to institute a new insurance program that will protect investors as well as offset the risk of loaning money to countries currently crippled by debt. The plan is ambitious, but Italy may not be able to benefit from it as Germany and France begin to petition the EU to remove the country from the union for the sake of financial stability.
Italy is now looking for help from the insurance industry, hoping to obtain some protection for the country’s government bonds. Insurance would help protect the value of these bonds and significantly reduce the risk faced by lenders when loaning money to the country. Even the best insurance policies will not offset Italy’s massive debt, however, so government officials are hoping to be included in the EU expansive insurance plan that may be enacted next year.