this post was submitted on 19 Jul 2024
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Years ago I read an study about insurance companies and diversification of assets in Brazil. By regulation, an individual insurance company need to have a diversified investment portfolio, but the insurance market as a whole not. the diversification of every individual company sum, as a whole of all the insurance market, as an was exposed market, and the researchers found, iirc, like 3 banks that if they fail they can cause a chain reaction that would take out the entire insurance market.
Don't know why, but your comment made me remind of that.
That's kind of fascinating, never considered what the results of that kind of regulation can bring without anyone even noticing it at the time. Thanks for a good reading topic for lunch!