Rising Interest Rates Help Insurers, but Market Volatility Poses Risk to Some

Ruth Leung and Arthur Fliegelman

No 22-04, The OFR Blog from Office of Financial Research, US Department of the Treasury

Abstract: While the insurance industry has been subject to stresses recently, it is unlikely to affect the stability of the U.S. financial system in the near term. During the prolonged low-interest rate environment, certain investment strategies were adopted, widely, by insurers in an attempt to boost yields. However, enhanced yields do not come without trade-offs, such as increased risk and reduced liquidity. We explain three insurance industry investment trends of which policymakers should be mindful.

Date: 2022-07-21
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