Insurance Quotes & Advice

The ongoing recession has forced many consumers and businesses to find ways to cut corners in order to save money.  One thing happening more and more frequently is cutting back on insurance, which has left many people and entities under insured and in some cases without coverage at all.

This is the summer of the new frugality. Americans everywhere are clipping coupons, searching for freebies and finding all sorts of creative ways to save money. Saving money is chic; another way to impress the neighbors. But others are making far tougher choices that threaten to cost them far more than they save.

Reducing insurance coverage, whether it’s a consumer or a small business making the cuts, does mean instant cost savings. But it’s proving to be problematic for some people, leaving homes and businesses underinsured and their owners facing huge monetary losses should disaster or illness strike. It’s also making families vulnerable to financial hardship because some are giving up their life insurance.

The role of insurance in society can’t be overstated, it serves as an effective way to mitigate the risks of a smaller party by pooling that risk through a large number of parties.  Unfortunately it has become a popular choice for many people trying to save money but in essence they are gambling with their future by leaving themselves open to potential uninsured losses.

We can see this clearly with the current state of health insurance coverage, where over 50 million people are currently uninsured and a number more are under insured.  This is the reason the government is pushing so hard for healthcare reform even though the current financial crisis has pretty much left the till empty.

The strain of uninsured medical coverage on emergency rooms has placed much of the burden on local government which in turn has to turn to the federal government for financial support in many cases.  The fact that Medicare will go bankrupt in the next decade also plays a large role in the current administration’s drive to revamp healthcare.

So while for some it may be a difficult choice to cut back on insurance, for many others they have no choice at all, where that money could make the difference in putting food on the table.  Unfortunately cases like this will likely grow as unemployment is expected to rise through the end of the year.

When life insurers created variable annuities, they thought they had a reasonable competitor to the widely popular mutual funds.  It offered customers the possibility of reasonable returns for very little risk, but unfortunately that risk passed onto the insurance companies themselves.

A few years back, no one foresaw the stock market falling by roughly 40% over a short period of time and now insurers are paying the price over the success of their variable annuity investment vehicle.  By giving customers the option to pretty much guarantee their principles, insurers have opened themselves up to considerable losses at time when their own investments have taken a beating.

A number of life insurers have received access to the Troubled Asset Relief Program and although at this time only the Hartford looks like it will accept federal funds, that could change quickly.  Capital is the lifeblood of any insurance company more so than for any other financial institution due to the inconsistent nature of their liabilities.

The longer the recession drags out, the more likely we will see other insurers seeking to bolster their capital reserves by accessing the federal funds despite the public stigma such an act would entail.  Unless we see a substantial recovery in the stock market in the near future, a number of life insurers are still looking at some significant losses in the upcoming quarters.

To be successful, insurance companies need to carefully manage their risk profiles and in this case they failed miserably and could be paying the price for quite some time.

The Obama administration faces numerous obstacles in their effort at healthcare reform.  Despite efforts to seek bipartisan support, Republicans have been firmly against any sort of public healthcare plan and there a quite a few of the more conservative Democrats that have their objections as well.

It’s obvious the current system is completely broken, we have Medicare which will go bankrupt in a little more than 8 years as well as 50 million Americans which are uninsured which cause a massive drain on state budgets across the country.  Unfortunately there is no easy or cheap fix, as things stand now, it’s looking like the administrations current proposal will likely cost over a trillion dollars in the first decade alone.

Thus far Massachusetts has been the only state to attempt mandating universal healthcare insurance, but they are quickly finding out that the costs have far exceeded their expectations and have been forced to ask for federal support to fund their program.  With federal budget deficits expected to exceed $3 trillion over the next two years, the federal government would be hard pressed to find ways to fund such a program on a national level.

However, it is equally obvious some sort of change needs to take place, the unfunded liabilities of the Medicare program are staggering and despite previous attempts to control costs, they continue to spiral out of control.  It is at a point where annual federal healthcare costs now exceeds the entire military budget spending.

American business are struggling to pay for the healthcare costs of their workers.  One only need look to the auto industry to see how their healthcare costs put them into a distinct disadvantage with their competitors around the world.

As difficult it is to say, dealing with the growing number of uninsured has to be considered a secondary objective and it could quite possibly be fiscally unfeasible.  Something first needs to be done to control healthcare costs and any type of reform that doesn’t focus on that will be doomed to failure.