29.10.1929

New York

United Arab Emirates

The Wall Street crash of October 1929 came as a surprise to many, including most foreign insurers active in the US market. Worse, it was not just one crash. It was a series of slumps with no clear prospect of a steady recovery.

When the crisis spread to Europe in 1931, European insurers active in the US market were strongly affected. The UK abandoned the gold standard and 25 countries followed its example, allowing protectionism and capital controls to take over. Trade agreements were now only made bilaterally and import quotas were fixed. Many insurers that had invested in foreign markets were severely hit; many went bankrupt. Some countries tightened their regulatory laws and further reduced the market share of foreign insurers.

If the San Francisco earthquake of 1906 had taught the insurance industry that natural catastrophes could result in losses far beyond what had been calculated, inflation and the financial crisis forced it to recognise that monetary and financial upheavals could wreak even greater havoc.

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