Insurance Quotes & Advice

As the millions of baby boomers begin to retire in the next few years, insurance companies are poised to rake in the cash.  This segment represents a quarter of the population of our country with an estimated purchasing power of well over $1 Trillion Dollars.

Some experts on Wall Street are worried about the adverse effects all these people leaving the work force will have on the stock market.  The insurance industry of the other hand will be welcoming them into retirement with open arms.

Many analysts feel that there will be a significant outflow of dollars from the stock market as baby boomers shift from riskier investments to safer alternatives in preparing for their retirement years.

A good portion of this money is expected to go into the coffers of the insurance industry as people begin to cash in their pension funds and purchase  a wide variety of insurance products, from annuity contracts to long term care plans.

With the uncertainty in the future solvency of the Social Security system as well as Medicare and Medicaid, the prospect of receiving guaranteed income streams for life that annuity products represent becomes very attractive.

Even the most pessimistic of forecasts still sees a large influx of capital to the industry.  You can already begin to see signs of this as sales of annuities have picked up in recent months.  Some of this you can attribute to people’s fear that the economy is heading for a downturn and the general effect it will have on the stock market.

So while there are many other investment options that might offer the possibility of more attractive returns, the current troubles of the housing market and financial sector will only see the insurance industry benefit as people flee to safer havens.

In welcome news to Florida homeowners, state regulators denied Allstate Insurance in their bid to raise property insurance rates by as much as 43% statewide. 

When the company filed for the rate hike October 1, Florida Gov. Charlie Crist was very critical of the company citing legislation the state passed earlier in the year to increased it’s Hurricane Catastrophe Fund by $12 Billion.  The fund gives insurance companies a cheaper reinsurance option and was expected to save the industry millions in the state.

While Allstate did lower rates earlier this year by 14%, regulators felt the company didn’t pass on enough savings to customers which was a prime reason for denying this rate increase.  The company’s stated that the reason for the increase was that it’s assets were not sufficient to meet all their claims in a worst case scenario.

It will be interesting to see what Allstate’s next move will be.  They do have the option of filing a petition for a hearing before the state’s Division of Administrative Hearings.

In the past, Allstate hasn’t been shy about leaving states that the company felt presented an unwarranted risk to it’s overall business plan.  Earlier this year the company announced it was leaving the property insurance market in California due to the high risk of wildfires in the state.

In a side note some industry analysts predicted insurance rates for all fields will either decline or remain flat for 2008.

A recent article in the New England Journal of Medicine by officials in the Congressional Budget Office talks of the increased burden of Medicare and Medicaid and the roles they will play in the fiscal wellbeing, or lack thereof, of our country if their costs maintain their current growth rate. 

They predict that by 2050 total costs of both programs will account for the same percentage of the economy as to what the entire federal budget does today.  They go on to propose possible approaches at addressing the underlying costs of the programs namely the costs of health services itself.

While sometimes people confuse the two programs, Medicare is a federal program designed to provide healthcare for individuals age 65 and over while Medicaid is a joint state and federal program for qualified individuals and families with low incomes.  Both programs were instituted in 1965 as part of reforms to the Social Security Act.

In it’s most recent annual report The Medicare Board of Trustees stated that the program’s total expenditures were $408 Billion for 2006.  By comparison that is roughly equivalent to our entire defense budget which was $419 Billion last year.  They also project that their Hospital Insurance Trust Fund would run out of money by 2019. 

The news is even bleaker for the states, the National Governors Association reported in June of this year that Medicaid on average takes up 22% of each state’s annual budget.

These numbers are simply staggering and budget deficits which are alarming already will only get much worse in scope as the baby boomer generation begins to retire in the next few years and costs begin to spiral out of control.