Saturday, January 31, 2009

Why Insurers Need Not Fear Recession

Posted By: Stephen Mills; Group 1A

On the New Year’s Eve just passed, 1,147 vehicles were torched on the streets of France, almost a third more than the year before. Brits too, are more partial to burning cars in times of economic strife, according to Andrew Torrance, head of British operations at Allianz, an insurer. There was an alarming rise in fires during both of the past two slowdowns (see chart). Arson is just one of the behavioural changes that drive up claims against insurance companies when economic growth stalls. Other types of crime rise. People and companies become more litigious. Firms offering credit protection are exposed to bankruptcies. At the same time, demand falls. For property insurers, say, there are fewer new factories and houses to insure. And life insurers struggle to sell policies when people are penny-pinching.

This combination of higher claims and lower new business written would appear to be toxic for underwriters. But as you might expect from the insurance industry, it is a lot more complicated than that, because recessions also tend to depress some types of claims. People drive less, reducing the number of motor accidents. The industries that often shrink most in a recession—construction and manufacturing—are among the most dangerous for workers. That means fewer payouts for insurers that have written protection against injuries. And for commercial and industrial property, though damage to premises rises, the cost of finding alternative facilities is lower.

Moreover, says Robert Hartwig, of the Insurance Information Institute, an American trade body, most existing non-life policies are nondiscretionary. In developed countries if you want to drive a car, employ a worker, or buy a house with a mortgage, you usually need insurance. At the same time, the credit crisis has eaten into insurance firms’ capital—although the industry has managed its assets better than the banks have. Less surplus capital should improve underwriting discipline, pushing up rates. By most accounts this process has begun.

Click for full Article


  1. I am in fact happy to glance at this weblog posts which includes plenty of helpful information, thanks for providing such data.

    Have a look at my web site ... how to calculate bmr
    My web page: Weight Loss calculator

  2. In this competitive world, news information is like knowledge recourses that educate us about various world wide activities and
    the activity within the society, even in the surrounding etc.
    The mobile news service facility is very new and unique concept that has created a buzz
    among every citizen. They can also update news on their site as
    and when the event occurs while the newspapers have to wait until the next morning.

    Look into my blog ::

  3. Thus, there are many broad options for getting to know various kinds of news today and that too through the use
    of various mediums. We realize that we don't need to listen to outside authorities; we are not guided by our internal authority. It the radio was the only one that used to deliver the days news and weather updates.

    Also visit my webpage Latest Daily News

  4. What a funny blog! I really enjoyed watching this comic video with my family unit as well as with
    my colleagues.

    Look at my weblog:

  5. Helping optimistic people excel - in 7 areas of life is
    her mission. If you weigh yourself everyday or every other day and see that you've gained weight, your motivation may go down and you'll
    be likely to give up. The decisive factor is that men would want to show themselves as hot and rock solid before the fashionable ladies as ever.

    Also visit my web site -

  6. But it's always wise to check in with a doctor before you start using a supplement regularly. My grandma can really feel vindicated at such a claim,she's been saying this all my life.
    This type of exercise will increase your cardiovascular endurance, improve your flexibility, increase your muscle strength, improve your balance and can actually
    reduce the risk of osteoporosis.

    Here is my web page -

  7. Hello just wanted to give you a quick heads up and let you know a few of the images aren't loading properly. I'm not sure why but I
    think its a linking issue. I've tried it in two different web browsers and both show the same outcome.

    Also visit my web page;

  8. Hi there, after reading this awesome post i am also happy
    to share my know-how here with colleagues.

    Feel free to visit my homepage

  9. Hey I know this is off topic but I was wondering if you knew
    of any widgets I could add to my blog that automatically tweet my newest twitter updates.
    I've been looking for a plug-in like this for quite some time and was hoping maybe you would have some experience with something like this. Please let me know if you run into anything. I truly enjoy reading your blog and I look forward to your new updates.

    Also visit my web page; mouse click the up coming document

  10. So, while I am no roving reporter I am endeavoring with my
    menial reporting skills, to bring you. The effects of what they see,
    read and hear are having a devastating affect on our society today.

    All kinds of sports news today are offered live through the television.

    Also visit my page :: Latest Daily News

  11. For normal delivery the mother should be fit to cope with the delivery.
    I spent hundreds of dollars trying to find that
    "quick fix" or magic solution that would have allowed
    me to drop the desired pounds and have the perfect body.

    Menopause weight gain is not inevitable, but it
    can be more difficult to maintain a healthy weight as your metabolism slows.

    Here is my blog post: Learn Even more

  12. Or maybe you look at it from a monetary standpoint and decide that Guy Ritchie and Madonna divorce was worse because they were married so long and have children and there is a lot of money
    involved. Who does not want to know what is happening in our favorite celebrity''.
    The singer will not be charged for her public intoxication, but her boyfriend was charged a
    $30,000 bail fee to release himself after he was tested positive for driving under the influence.

    Feel free to surf to my web-site ... latest celeb news

  13. You need to flex those muscles regularly to keep them strong and
    resilient. You may want to try the buddy system, as lot of
    people find that this motivates them tremendously.
    I am aware this seems enjoy ridiculous advice - Get real
    if you may possibly just flip a switch and enjoy exercise you would certainly, right.

    my web site ::

  14. Most of you hunger to know more about the glitzy life styles of glamorous celebrities
    and sensual models. You can give tips to the workers in the
    salon, restaurants where the star visit frequently. This
    is why the said Albanian gossip thashetheme celebrity news blog
    page is written in Albanian '.

    my blog post; hot news

  15. Hey there! Quick question that's totally off topic. Do you know how to make your site mobile friendly? My blog looks weird when viewing from my iphone 4. I'm trying to find a template
    or plugin that might be able to resolve this problem.

    If you have any recommendations, please share.

    Here is my site - workouts to improve vertical jump

  16. I was suggested this web sitе through mу couѕin.
    Ι'm no longer positive whether this publication is written via him as nobody else recognise such detailed approximately my trouble. You are amazing! Thanks!

    Feel free to surf to my web site:

  17. Κeep on wгіting, grеat job!

    my web ρаge :: best rate loan