Most financial debt instruments are backed by PRIVATE INSURANCE companies; this even includes many government projects. As you should know when you read about “The government” PAYING for something, it’s usually the government CONTRACTING the services of the private sector to do certain tasks it wants to be done.
Those private companies need PRIVATE insurance. Now, you combine that with home, auto, life, commercial, mortgage, and credit insurance, and you start to comprehend what this would mean to the entire financial sector.
Insurance is different in that it revolves around PROPERTY RIGHTS, or indemnity, not for profit. So, in the real world, the value of the property can actually DECLINE, so in the event that there’s a DEFLATIONARY or hyperinflationary event, the entire insurance industry would have to rediscover prices.
This is a huge problem in countries that have currencies that are constantly being debased. If the insurance industry crashes in the West, expect a financial collapse to occur next. Truth be told, typically, the financial sector would crash before the insurance sector does.
When governments print money to solve problems and don’t reverse course on regulations, hyperinflation is inevitable, and hyperinflation destroys insurance. If it costs $2000 to buy eggs and some bread, your $250,000 life insurance policy, for example, becomes worthless!