The law of unintended consequences continues to wreak havoc in the eurozone. Caught in the middle of a desperate banking-sector deposit war, Europe's insurers are pulling back from savings markets in Italy, France and Spain. That in turn reduces their demand for sovereign bonds, adding to concerns over government funding, which increases pressure on the banks.

Insurers blame their retreat from savings markets on weak demand and poor returns on some new business. Net inflows into Assicurazioni Generali's Italian life-insurance business are down almost two-thirds this year. Aviva's French insurance sales fell 17% in the first nine months compared to the previous year, and it has effectively stopped selling one popular Italian savings product. Zurich Financial Services notes some Spanish life-insurance business has become uneconomic to write.