Description
The Global Financial Crisis in 2007/08 brought an increased interest in the power of finance. Within the field of International Political Economy, this analysis has focused on the power of banks primarily, while non-bank financial institutions, and insurance companies in particular, have received less attention in IPE research on financial power. This neglect is significant, as the insurance industry is central to risk management and necessary for global finance and trade. The aims of this paper are two-fold. First, to explain the puzzle of why insurance companies have been neglected in the power of finance literature. As the paper argues, insurance companies are perceived as less significant, and no separate frameworks are applied for them. However, due to insurance firms’ distinct business models and unique inter-linkages with other sectors, prevailing frameworks of financial power do not adequately capture them. The second aim is to redress this conceptual blind spot by developing new frameworks of financial power, which capture insurance companies’ role as risk mitigators rather than credit facilitators. The paper further shows that manifestation of financial power varies depending on lines of business of insurance firms. The new framework is applied to the UK, which has a significant insurance sector.
