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Insurance Initiative

The Chicago Fed Insurance Initiative aims to understand the role of the insurance industry in the overall economy, with an emphasis on the industry’s role in the financial sector. We feel that deeper knowledge of the insurance industry will have payoffs for both policy and research. Our goal is to be a source of expertise within the Federal Reserve System for issues related to insurance. While our focus is broad, we also recognize the important role of the insurance industry in the Seventh Federal Reserve District.

The Initiative involves documenting and tracking the relationship between the insurance industry and the broader economy. In particular, we are analyzing and assessing the transmission of financial shocks to and from the insurance industry. To accomplish these objectives, we are developing a set of tools, such as regularly updated industry indicators, to assess the health of the industry. In addition, we are producing reports, based on our in-depth analysis of specific aspects of the industry. Our findings draw on analysis of regulatory and accounting data in combination with insights gained from in-depth conversations with experts in the insurance and financial industries.

The Insurance Initiative is motivated by the importance of the insurance industry in the overall economy, as well as the key role the industry plays for households and financial markets:

The Economy

  • The insurance industry accounts for approximately 3% of annual GDP.
  • The industry employs 2.2 million individuals in the U.S.


  • 70% of U.S. households in 2010 had some form of life insurance.
  • Life insurers paid out $419 billion in life insurance and annuity benefits in 2009.

Financial Sector

  • Insurance companies are a critical source of funding for corporations, as well as for city and state governments: Insurance companies hold 20% of all corporate and foreign bonds and 15% of all municipal debt.
We believe that the quality of our analysis is significantly enhanced through discussions with industry and financial sector experts. By talking to a broad range of experts, we gain a variety of perspectives on the issues and risks facing the industry. This ensures that our conclusions take into account multiple viewpoints.

Featured Publications

The Risks of Pricing New Insurance Products: The Case of Long-Term Care
Zain Mohey-Deen and Richard J. Rosen
Chicago Fed Letter
2018, No. 397

What Explains the Decline in Life Insurance Ownership?
Daniel Hartley, Anna Paulson and Katerina Powers
Economic Perspectives
2017, Vol. 41, No. 8

How Much Risk Do Variable Annuity Guarantees Pose to Life Insurers?
Alejandro H. Drexler , Thanases Plestis , Richard J. Rosen
Chicago Fed Letter
2017, No. 384

Rules and Discretion in Life Insurance Regulation
Alejandro H. Drexler Zain Mohey-Deen and Richard J. Rosen
Chicago Fed Letter
2017, No. 373

Do Insurers in Catastrophe-Prone Regions Buy Enough Reinsurance?
Florentine M. Eloundou Nekoul and Alejandro H. Drexler 
Chicago Fed Letter
2016, No. 360

The Life Insurance Industry and Systemic Risk: A Bond Market Perspective
Anna Paulson and Richard J. Rosen
Working Paper
2016, No. 2016-04

Measuring Interest Rate Risk in the Life Insurance Sector: The U.S. and the U.K.
Daniel Hartley, Anna Paulson and Richard J. Rosen
Working Paper
2016, No. 2016-02

AIG in Hindsight 
Robert McDonald and Anna Paulson
Working Paper
No. 2014-07

View All


Contact Us
Insurance Initiative Team

Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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