Like most other enterprises in the United States, the insurance company is suffering during the current economic recession. Unfortunately, the pains of the insurance giants may have a nasty affect on your wallet. According to Bloomberg News, the insurance industry reported a net income drop of 96%, slipping from $61.9 billion profits in 2007 to $2.4 billion in 2008. The sharp decline resulted from companies being forced to lower their prices in order to gain business from manufacturers, builders, and banks that began cutting back on their coverage plans. Drivers have also reduced their insurance purchases during these tough economic times. Also, a record number of tornadoes and a catastrophic hurricane season increased the insurance company’s claim payments.
What does this mean for the consumer?
The American Association for Justice (AAJ) predicts an increase in insurance costs. The group warns insurance buyers to prepare for even tighter policies about paying claims and more expensive premiums as the insurance giants seek to regain their losses. Ray De Lorenzi, a spokesman for AAJ, said that the economic recession is not an excuse for insurance companies to raise premiums and deny claims just to help their bottom line. He also noted that although their profits have fallen this last year, the insurance industry is one of the few industries in the country to have reported a profit at all. Lorenzi said in a statement, “The insurance industry is being put on notice. These companies should pledge an allegiance to policyholders, not shareholders. Any attempt to use this economic crisis to unfairly raise premiums or systematically deny just claims will not go unnoticed.”
As this economic recession continues to deepen, be prepared for rising insurance costs. For more information on insurance policies and how to buy correct car insurance coverage, you can download a free Utah car insurance report from the Christensen Law Firm’s website.