Can somebody provide a good definition / explanation of disintermediation in the context of the liquidity constraints formulation of an IPS. Thanks,
Should have mentioned that it is for a life insurance company IPS. Thanks.
is this the joke with the hooker with disintermediation? i said he’ll flip yah… flip yah fa real disintermediation is the withdrawal of funds (unexpectedly) due to higher interest environment …so in terms of insurance companies the companies are forced to honor liquidation request
obliged. btw I think it’s spelt hoocker, but I’m no expert…
Life insurance companies have investment products linked to life policies . They offer competitive interest rates on these investments. As rates rise , clients may be tempted to jump ship and move their assets to a competing life insurance company. This is called disintermediation , rather like a put option owned by the investor. This can create liquidity issues for the company
In addition, disintermediation can hurt the companies real bad as they are forced to liquidate investments when interest rates are rising…