Insurance Quotes & Advice

Overall the situation is starting to improve for insurers across many different sectors.  While premiums continue to fall and underwriting levels are down due to the recession, the partial rebound of the stock market has seen the value of many firms investment portfolios recover somewhat.

Let’s be realistic, investment income has been the industry’s bread and butter for some time now and the nearly 40% drop in the stock market during the recession caused some worrisome times for many insurance sectors.  Of course the bond and mortgage insurance sectors are still having a fairly rough time of it but that will likely continue until the credit system and housing market returns to normal.

Also the upcoming regulatory shakeup is likely to include some form of federal supervision, something the industry has long sought.  Right now, states are in charge of insurance regulation and many firms dislike have to deal with the conflicting rules and individual rate setting that is required with the fifty different states.

That being said, it will still be some time before the industry fully recovers from the financial crisis.  They are likely to see a period of slow growth for many years to come.

A year ago, AIG nearly collapsed in the wake of the Lehman Brothers bankruptcy and would have, if not for a massive federal bailout.  A new CEO was installed in August, Robert Benmosche, who took over for Edward Liddy, whom was appointed by the Treasury Department last year to oversee AIG’s restructuring.

AIG built up a huge of amount of leverage and the accompanying risk, through the use of credit derivatives, a largely unregulated market.  Those bets turned disastrous in the wake of the subprime collapse.

The insurer finally returned to profitability in the 2nd quarter after reporting over $100 billion in losses over a year and a half period.  The company still owes over $182 billion to the federal government, although their new CEO has stated recently that the company will not be pressured into selling their assets in an unfavorable market.

AIG may be looking to restructure their bailout once again, seeking lower interest rates and a longer period of time in which to repay their debt.  It also remain to be seen how much more of an active role the government will take since they control 80% of the equity of the company.

Still, many analysts believe AIG will remain a viable company even after repaying all of it’s debts and could still be a large force in the insurance world after selling off it’s non-core assets.

The recession hit business hard and they are looking for ways to cut costs.  One of the ways is to shift more of the burden for healthcare benefits to their employees.

Healthcare costs have spiraled out of control with a recent study from the Kaiser Family Foundation finding that premiums for the average family have risen 131% over the last decade.  With premiums far outpacing inflation, it’s a trend that many Americans won’t be able to keep up with for long.

When asked about their plans for next year, 21 percent of offering firms say they are “very likely” to raise workers’ premium contribution next year, and 16 percent say they are  “very likely” to raise deductibles.  Just 4 percent say they are “very likely” to restrict eligibility for coverage, and 2 percent say they are “very likely” to drop health coverage altogether.

Nearly 7 million Americans have lost their jobs already during the recession and even with COBRA insurance allowing most to keep up with their coverage, many are finding the burden just too much to bear.  Both the employed and recently unemployed are finding it necessary to cut their health benefits in order to make ends meet.

Although the healthcare debate has been controversial at times, the majority of Americans are in support of healthcare reform.  While it seems the debate has stalled somewhat, the President is still hoping that something can be done by the end of the year.

It is vital that Congress finds a way to get cost under control.  We already have a sizable portion of the population unable to afford health insurance, if we have another decade like the last, that percentage will rise appreciably.