BUSINESS
04/03/2009 05:12 am ET Updated May 25, 2011

Gov: AIG's Systemic Risk Could Lead To Collapse Of Insurance Industry

One of the biggest worries, besides the considerable collateral damage to the banking system, is a risk that most people aren't talking about, perhaps because it's too scary. This one is probably easier to understand than any kind of financial chicanery: the dangers lurking below A.I.G.'s seemingly stable, highly regulated life insurance business. In the United States, A.I.G. has more than 375 million policies with a face value of $19 trillion.

If policyholders lost faith in A.I.G. and rushed to cash in their policies all at once, the entire insurance industry could falter.

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