Insurance Quotes & Advice

Currently insurance companies are regulated by each individual state.  Congress has been for years discussing legislation to reform the current regulatory system.  The MacCarran-Ferguson Act passed in 1945 exempted insurance companies from federal anti-trust laws and gave states the power to regulate the business of insurance.

There are three basic sides in this battle over reform, state regulatory commissions, insurance companies plus their agents and consumer advocacy groups.

State Regulatory Commissions

For many years states have been fighting any attempts to give the federal government oversight over insurance companies.  They feel strongly against that preempting state laws would be a big mistake and that adding an extra layer of bureaucracy would make the entire system unwieldy and  unresponsive to consumer needs.

Insurance Companies

This is a complicated issue for them.  On the one hand, being subject to federal anti-trust laws has to be a main concern but on the other, having a uniform regulatory code that doesn’t vary from state to state would be very beneficial to them.

Consumer Advocacy Groups

Many of these groups have sharply criticized the insurance industry over it’s handling of the Hurricane Katrina disaster.  At issue are the claim’s paying practices of mainly property and casualty insurers as well as pricing practices.  It has been this sort of public outcry that has prompted Congress to review insurance regulation reform.

There is a lack of trust on all sides of the issue.  States don’t trust the federal government and feel sweeping reform isn’t necessary.  The insurance industry feels that some states over reach with their regulatory powers and hurt business.  Consumer activists meanwhile mistrusts the powerful lobbying efforts of the industry in seeking reforms favorable to them.

It will be interesting to see how the battle plays out and it is quite possible none of the sides will get what they want.

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.