The prevailing view of the main change in the insurance industry in the United States since the 1970's has been the development of "Alternative Risk Transfer" and "Enterprise Risk Management". However, "Financialization of the Economy" has been a grater source of change on the insurance industry as it brought with it-financialization of insurance products, insurance premiums and the insurance business. This paper suggests that the insurance industry has been subsumed into the world of finance, which has meant the decline of the fundamental and comprehensive function of insurance, i.e. risk transference, risk pooling and risk distribution. Firstly, the financialization of insurance products means that they added a financial function to their function of compensation and security. In the era of financialization "Insurance Disintermediation" (the outflow of insurance money by canceling traditional insurance policies) triggered a change in insurance products by adding financial products such as investment trusts. Secondly, securitization of insurance products such as Catastrophe Bond (Insurance Linked Securities) was also a method of financialization of insurance products. Financialization of the insurance premium (which was originally based on the loss ratio) means that the level of the premium becomes influenced by investment yield, which is based on declining the insurance premium and ratio of profit for life insurers. The outcome of covering a deficit with investment transforms insurers to speculative institutional investors. In the 2007-2008 global financial crisis, the collapse of the major mono-line insurers and AIG shook the financial system. It was the first time that the collapse of insurers was deeply connected with the financial system. Financialization of insurance products refers to the expansion of credit. Financial guarantee insurance provides investors with the guaranteed payment of timely interest and the ultimate principal in the event of the failure of the issuer, which leads to incentives for investors to buy those financial products. CDS (Credit Default Swap) which mono-line insurers and AIG provide has had a similar function to financial guarantee insurance policies. As a result, mono-line insurers and the like have grown into a major source of credit enhancement.
