Insurers And Regulators Face Tough Battles Ahead
Many struggling insurers will likely be asking state insurance boards across the country for rate increases this year. Regulators on the other hand, mindful of the economic difficulties of many of it’s citizens will likely fight any rate hikes tooth and nail.
Unfortunately for many customers, the industry may have a pretty decent case this time around. The property/casualty sector posted major losses in the first quarter this year, much in large part to underwriting losses which were more than four times higher than the same period a year ago.
Many companies have openly criticized AIG, which flush with government funds, started lowering prices in an attempt to maintain it’s market share in the face of it’s diminished reputation. This caused a mini-price war which the entire industry likely regrets right about now.
In most years, even the kind of underwriting losses that occurred wouldn’t raise too many eyebrows, because they would normally have their investment profits to fall back on. This isn’t a typical year however and for some firms, every dollar matters and they will likely push for as much of a rate hike as they feel they can get away with.
The government has finally made it’s TARP program to insurers but truthfully there’s not really that much left in there and most that will still go to the banking system. As of yet only life insurers, most particularly annuity sellers are any real danger at the moment of needing access to those funds.
Whether that will stay the case, remains to be seen, insurers have dodged a bullet so far and have yet to make out any catastrophe pay outs this year. What will likely play the biggest role in many these rate battles is whether or not a major hurricane occurs in the next couple of months.
