An echo from the past

Derivatives offer excellent potential for spreading insurance risks across a wide base of investors. However, David Rowe argues that legal uncertainty represents a potential obstacle to traditional insurance companies' efforts to realise these benefits

A stable and predictable legal environment, administered by an independent judiciary, is a prerequisite for the development of fully effective competitive markets. A lack of such conditions arises most often in the context of emerging market countries with fragile legal systems. The economic impact of an uncertain legal system usually relates to whether the power of the state can be invoked in a fair and balanced way to enforce the obligations undertaken in voluntary contracts. It also relates