2 Replies to “What were the challenges ahead for the insurance industry in the context of the global credit crisis?”

  1. Depends on the type of insurance. PMI insurance companies are losing their butts and going bankrupt as the number of defaults is more than reserves can cover. The insurance companies that insured the mortgage backed securities are going bankrupt because the securities are basically worthless and investors are suing.

    Insurance will also have problems with a high level of fraud, desperate people commit fraud more often.

    Then for insurance like health, car, rental. long term disability, etc, they are in trouble because people with no jobs and no money don’t buy insurance or let theirs lapse.

    Finally, health & life insurance companies will be dealing with higher than average claims as stress over money makes people sick, is linked to cancer and of course, suicide and early death.

    Small to mid sized businesses (big ones too) are filing bankruptcy and closing in record numbers, which equates to fewer and fewer customers. Reduced sales and miles driven are linked to lower insurance premiums.

    So, I would think that the challenges are many, just as they are for nearly all companies, especially in America.

    In China, they will be just fine.

  2. Telling this out of a personal experience of a friend working in Insurance industry..

    For Life insurance….market has become choosy as far as insurers are concerned..

    after the TATA-AIG debacle, ppl are doubting every foreign firm involved in insurance..

    With AIG;s dropout, ppl have started questioning SUNLIFE’s credentials…(in Birla Sunlife)

    Challenges ahead include:
    restoring faith of ppl in the industry
    Credit worthiness of investors
    recessionary pressures and cost cutting scenario
    overall demand from general market.

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