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Simply trust insurance companies like you trust the other companies you exchange money for services with

April 7, 2008

Analysis of:US property insurance 2008 rates seen flat to soft | www.reuters.com

What is a business or homeowner's biggest fear?  One of them is the fear that something will happen and the insurance company will not be able to pay their claim.  This is simply a false fear in this day and age. Simply stated, insurance companies are running a business and they understand that if they are unable to pay claims, they will not only lose the trust of their company shareholders, they will also lose the trust of their clients. Insurance companies operate in a competitive market, however they do not rely on low prices to sell their products.  Would a retail firm sell their product at below cost.  Most likely they would not due to the fact they would not make any money and could go out of business. Insurance companies, under the same mantra, do not price their products so low that they can not retain a profit in the event of claims.

The housing & mortgage issues coupled with gas & food prices will have a domino effect

April 4, 2008

Analysis of:Overdue Consumer Debts Highest Since 1992, ABA Says | www.bloomberg.com

The housing market decline coupled with the mortgage crisis and bad loans has caused many people to go into debt. Many people got loans that were "too good to be true", because they were.  Other people wanted to turn a profit on a property and due to the housing problems, that didn't work and they had to keep paying the loan.  Also, other people got greedy and took out more money than they could afford because a bank was letting them, and they now have debt they can't keep up with. This, coupled with the rise in food and gas prices has made it even more difficult for those people, as well as other people, to keep up with their debt. The fact that summer is coming (gas prices always go up even more) and the housing and mortgage situation isn't getting better anytime soon, something has to be done by the country or this economy & citizen morale will continue to decline up to the election and possibly beyond.

Things get difficult when you lose 90% of your investments

March 7, 2008

Analysis of:MMC Sees 4Q Net Income Drop 62% | www.propertyandcasualtyinsurancenews.com

Any company will have difficulty if they lose 90% of their investment portfolio.  I understand that it is difficult to see positive returns right now, however, companies in the insurance business that depend on their investments, as well as other things, to pay claims, should be invesiting in long term bonds and other long term very safe investments.  When this happens, they may not make as much money, however, they will reduce their loss of principal and retain reserves to pay claims.  I am sure that the major rating firms such as AM BEST and S&P may downgrade their ratings making it even harder for them to sell their insurance to consumers due to such a fall in their investments.

21st Century media exposure + dishonest people + the mortgage crisis could = more fraud

February 29, 2008

Analysis of:Could Subprime Mortgage Crisis Turn Desperate Homeowners Into Arsonists? | www.propertyandcasualtyinsurancenews.com

Most people are never going to burn their homes down to collect insurance money.  That said, there will always be a contingent of people in the world that are willing and able to resort to fraud to better their position financially. With the advent of the internet and the ability for someone to research,  plan and execute a fraudulent activity easier and quicker than ever before, many people may see arson fraud as an easier thing to do than in the past.  With many shows on TV that deal with crime and crime scene investigation, people may feel more confident in their fraud, for they may believe they know enough to "beat the system". Exponential media exposure as mentioned above, coupled with the mortgage crisis in America, could potentially generate more people who are willing and able to attempt to collect on a fraudulent home insurance claim.  What they may not know is that insurance companies, DOI & insurance agents are trained and looking out for this activity.

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