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 Posted: Tue Jan 13, 2009 4:44 pm Post subject: Insurance industry during economic crisis |
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Hi Guys,
I am not from the US so I would like to ask this question. We all know that US is currently on its economic recession. What would happened to the insurance industry because of this? Can economic crisis affect the Insurance industry? If yes, in what way?
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joven222
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| Posted: Tue Jan 13, 2009 11:55 pm Post subject: |
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As I understand it, it's a world recession.
It affects insurance companies very much so as they rely in investing premiums in order to pay claims and make a profit. |
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tcope
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| Posted: Wed Jan 14, 2009 12:28 am Post subject: |
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| It really is a world recession. What happens if an insurance company fails? Say there are claims out there, paid premiums, or anything of the sort. What will happen to those type of things? |
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fireyone
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| Posted: Wed Jan 14, 2009 12:31 am Post subject: |
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joven222,
Are you an insurance agent? I see your posts in different forums and your signature is linked to an insurance quote engine.
Are you prospecting or just seeking material to publish elsewhere? |
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InsuranceMaze
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| Posted: Wed Jan 14, 2009 4:49 am Post subject: |
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| Quote: | | As I understand it, it's a world recession. |
Yeah, quite so but I doubt if the other parts of the world has suffered as much the US economy. In fact, IMO, that the world economy is kinda forced into this recession due of the failure of USA money market.
Joven, The insurance industry is still weathering the crisis, but it would succumb like any other financial industry if we don't take any immediate step to improve the situation.
The indexed annuity market is the worst affected one. Several people have lost grands on their pension funds. It may reduce the popularity of the indexed plans in the coming days.
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anonymous 12
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| Posted: Sat Jan 17, 2009 12:59 am Post subject: |
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| I would think in times like this the bogus claims would be up also, in rough times people do some weird things to get money, I have known people to "accidently" fall down a family members steps to collect on homeowners insurance. I would be interested in knowing if these stats are on the rise or not. |
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goodnatured
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| Posted: Sat Jan 17, 2009 9:26 am Post subject: |
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I'd also agree with both tcope and anonymous12 at describing it as a global recession. Like every other finance industry the insurance industry should also share the brunt. But remembering the volume of operations, we'd be assured of a lesser impact on this industry compared to its contemporaries.
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anonymous00
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| Posted: Sun Jan 18, 2009 1:41 am Post subject: |
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anonymous 12 wrote:
| Quote: | | The indexed annuity market is the worst affected one. Several people have lost grands on their pension funds. It may reduce the popularity of the indexed plans in the coming days. |
You are confused with the facts.
NOT one Indexed Annuity client has lost one dime in an Indexed Annuity.
You have confused Indexed Annuities with Variable Annuities.
Variable Annuities are sold by Broker-Dealers and their certified clueless clown Registered Representatives who had to get an insurance license to be able to sell the infamous bloated pig with lipstick known as a Variable Annuity with little or no insurance experience.
Indexed Annuities are FIXED Annuities with the interest credits tied to an outside index such as the S&P 500 but not one dime of the client's principal is at risk with the day traders playing stocks like a flea market swap meet. See graphic below.
The absolute worst thing that happens to a client's money in a Fixed Indexed Annuity is they would get 0% interest credits in a flat or down market with all principal SAFE and sound.
The Broker-Dealers and their certified clueless clown Registered Representatives have lost about 25% to 40% of their client's portfolio in 2008.
That money will NEVER be made back for anyone age 65 and older and even if they did make it back in ten years they would have effectively had zero growth on their money for 10 years.
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GarySpicuzza
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| Posted: Sun Jan 18, 2009 10:56 am Post subject: |
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Okay, now that we have the facts on the table let's talk about banking buffoons and Wall St. fraud.
In 1999 President Clinton signed the Financial Services and Modernization Act which "sounds good" on paper but in practical application it's a disaster for consumers.
See THIS LINK
| Quote: | | On November 4, 1999, Congress passed sweeping legislation that will dramatically reshape the financial services industry by removing barriers between banks, insurance companies, and investment firms which have existed since the Great Depression. President Clinton is expected to sign this historic legislation. |
So in less than ten years after this historic legislation was made law and the "Universal Banking Business Model" was developed and adopted both Wall St. and the banking industry are bankrupt AGAIN and for the exact same reasons the banks and Wall St. crashed in 1929.
The so-called "financial advisor" at Wachovia, Washington Mutual, Citibank, Bank of America and other now broke bass towards are the same clueless clowns who recommend you NOT "waste" your home equity and describes it as a DEAD ASSET.
It's these brain dead financial buffoons who suggests the bank make you a home equity loan or refinance your home and pull your cash out.
The bank makes money when you do this and so does their financial guy. Of course now that the bank's in house financial fox has found money this same jack assterisk will recommend you put that money into stocks, mutual funds or variable annuities because you'll make out like Bernard Madoff because the interest on your bank loan is less than what you'll make in the market and you'll get to keep the spread. Sound good?
Of course these jokers at the bank never quite get around to explaining how you're going to repay the principal and they NEVER talk about if the market declines for two or three years how you'll service your debt since you've lost 40% of the principal.
There used to be and there should be very high walls separating banking, investment firms and insurance companies so each entity competes for your investment dollars. I can readily assure you the financial advice you get from a banker, an investment firm or an insurance advisor is totally different.
The "Universal Banking Business Model" is like having the Mafia running state lotteries.
From the link above:
| Quote: | | Eliminates many Federal and State legal barriers to affiliations among banks and securities firms, insurance companies, and other financial service providers, including provisions of the Bank Holding Company Act of 1956 and Section 20 of the Banking Act of 1933 (commonly referred to as the "Glass-Steagall Act"). Full affiliation can now occur between the entities |
The Glass-Steagall Act was put into place after the Great Depression to PREVENT the exact type of financial fiasco we have right now in the USA.
You simply can't have banks who loan money also be the same entity that advises the same person where that same money could be invested, just like you can't have the Mafia running state lotteries.
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GarySpicuzza
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| Posted: Sun Jan 18, 2009 3:50 pm Post subject: |
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| Quote: | | Can economic crisis affect the Insurance industry? |
Oh yes... | Quote: | | If yes, in what way? |
All of the larger carriers I know about lost a lot of money, (ie fannie, and freddie and others)...also all of the larger carriers i know (in the claims and other depts...NOT sales) have hiring freezes, and layoffs going on...Goodnatured.. | Quote: | | I would be interested in knowing if these stats are on the rise or not. |
I've been in this biz for over 20 years...in all that time, about one out of about 15 or 20 'tried to get something they didn't have coming'...when the economy tanked and gas prices hit the roof, it took a turn i have never seen in all my years, now easily 5 out ten, and i'd say more like 7 out of ten try to get 'something' that is not related...i've never ever seen it like this..(remember I only handle auto claims now so I'd assume the HO claims are as bad or worse) claims for the most part have been down since the economical down turn....people just are not driving as much as they did prior to the gas (and everything else) price jumps, although gas has dropped there is (apparently) no confidence that it will stay that way.
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Lori
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| Posted: Sun Jan 18, 2009 5:57 pm Post subject: |
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Gary, how much do you know about Wendy Gramm?
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Cascade Dave
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| Posted: Mon Jan 19, 2009 10:45 am Post subject: |
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| Quote: | | Gary, how much do you know about Wendy Gramm? |
I don't know anything about her.
Is she the "other" half of Senator Phil Gramm of the infamous Gramm-Leach-Bliley Act?
| Quote: | | The Gramm-Leach-Bliley Act, also known as the Gramm-Leach-Bliley Financial Services Modernization Act, Pub.L. 106-102, 113 Stat. 1338, enacted November 12, 1999, is an Act of the United States Congress which repealed part of the Glass-Steagall Act of 1933, opening up {my words FRAUD} competition among banks, securities companies and insurance companies. The Glass-Steagall Act prohibited a bank from offering investment, commercial banking, and insurance services. |
Actually it opened up the flood gates of fraud between Banks and Wall St.
This is too funny:
Criticism and Defense:
| Quote: | | Economists Robert Ekelund and Mark Thornton have criticized the Act as contributing to the 2007 subprime mortgage financial crisis, arguing that while "in a world regulated by a gold standard, 100% reserve banking, and no FDIC deposit insurance" the Financial Services Modernization Act would have made "perfect sense" as a legitimate act of deregulation, under the present fiat monetary system it "amounts to corporate welfare for financial institutions and a moral hazard that will make taxpayers pay dearly". |
In response to criticism, President Clinton himself stated:
| Quote: | | "I don't see that signing that bill had anything to do with the current crisis. Indeed, one of the things that has helped stabilize the current situation as much as it has is the purchase of Merrill Lynch by Bank of America, which was much smoother than it would have been if I hadn't signed that bill ... On the Glass-Steagall thing, like I said, if you could demonstrate to me that it was a mistake, I'd be glad to look at the evidence." |
You have to laugh at these people who live their whole life in "theory" but have never owned or operated any type of business in their life. Like I said above allowing investment firms and banks to be in bed together is an incestuous duet and no different than allowing the mob to run state lotteries.
There's nothing quite like a bankrupt bank (Bank of America) buying a bankrupt investment firm (Merrill Lynch) with phoney money,... a check,... printed by the USA government!
| Quote: | Kenneth Lewis gambled on bold acquisitions to build Bank of America into the nation's largest bank.
But the need for fresh government support to grapple with the newly revealed losses at Merrill Lynch, the brokerage firm he snapped up in a rapid-fire arrangement at the height of the financial crisis in September, raises questions about whether the bank has gone a deal too far.
Two weeks after closing its purchase of Merrill Lynch at the urging of U.S. regulators, the government cemented a deal at midnight Thursday to supply Bank of America with a fresh $20 billion capital injection and absorb as much as $98.2 billion in losses on toxic assets, according to people involved in the transaction.
The bank had been pressing the government for help after it was surprised to learn that Merrill would be taking a fourth-quarter write-down of $15 billion to $20 billion, according to two people who have been briefed on the situation, in addition to Bank of America's rising consumer loan losses. |
Source link.
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GarySpicuzza
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| Posted: Mon Jan 19, 2009 12:03 pm Post subject: |
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Wendy Gramm, wasn't she somehow involved in the Enron debacal? Yep thought I remembered that name.....here we go... | Quote: | You'd expect Wendy Gramm, now head of the Regulatory Studies Program at George Mason University's Mercatus Center, to recognize that the Enron board's extraordinary failure indicated a dire need for reform. You'd be dead wrong.
Gramm thinks the system works just fine. After all, she pocketed an estimated $2 million as an Enron director.
Gramm joined Enron's board after chairing the Commodities and Futures Trading Commission, where she issued regulations that legalized the type of electricity trading that helped Enron make millions in illegal profits (on Gramm's watch as a director). As a member of Enron's audit committee, Gramm found nothing wrong with accounting tricks that inflated earnings and siphoned money to selected executives in violation of company rules, if not federal laws. Coincidentally, Enron also delivered campaign cash to Gramm's husband, former U.S. Sen. Phil Gramm of Texas, and now provides that arch opponent of big government with his first private-sector job in decades at the Swiss bank UBS, which owns the rump of Enron's energy trading operations. Wendy Gramm's comments to the SEC combine her signature knee-jerk dismissal of any government regulation as unnecessary and potentially harmful with this analysis of how boards of directors should function vis-à-vis investors:
"Boards who [sic] consistently operate at variance with shareholder interests (i.e., who do not maximize share values) will see the values of their firm's shares fall, other things equal. As the shares become cheaper, the firm becomes a more attractive target for takeover. Even barring takeover (because of, say, a poison pill provision), a persistent abuse of shareholders interests must eventually result in bankruptcy. In either instance, assets will be stripped from the self-dealing board's control and surrendered to others who may be better able to enhance share values. Indeed, the recent spate of corporate scandals has, if anything, provided vivid testimony as to how quickly and efficiently this market process works in practice."
In other words, Enron's bankruptcy was a triumph of market efficiency. Gramm's vision understandably ignores directors' fiduciary duty to shareholders; she ignored it while sitting on Enron's board, too, so at least she's consistent. She's opposed to regulations that might give investors tools to ensure that directors perform their legal oversight obligations; the market demands that shareholders watch helplessly if executive malfeasance skins the value of their holdings toward zero (and vultures like UBS can get the bones cheap).
While she preaches living by the market's risks and rewards, Gramm found a pretext to avoid that risk herself while making decisions that helped bankrupt Enron.
In 1999, Gramm declared that owning Enron stock presented a conflict of interest with her duties as a director. That assertion is pure drivel, violating basic common sense and norms of good corporate governance; directors legally bound to protect investors should be investors, too. By Gramm's logic, only non-citizens should be lawmakers or judges, so their decisions won't be tainted by having to live with the consequences.
Gramm's ludicrous claim made sense in one context: It provided a convenient alibi to cash out her Enron shareholdings for $300,000 and to insist on getting paid in cash while she was approving the company's secret steps along the financial precipice. When Enron went over the cliff, the Gramms even portrayed themselves as victims: Wendy's stand on her imaginary moral high ground led her to sell before Enron's price peaked, they whined, so she forfeited some potential profits. Enron employees lacking Gramm's finely tuned ethics, and the rest of the investing public lacking her inside knowledge of the company's twisted finances, were left holding worthless paper.
As Gramm sees it, if you lost your retirement savings or your job because you trusted me to do my duty, quit whining: That's how markets work. My friends and I made lots of money because we kept government regulators out of the markets and rigged things in our favor. Don't introduce even a hint of democracy into voting for corporate directors that might prevent us from doing it again.
It's sad to see this argument on the letterhead of George Mason University. The real George Mason was a passionate defender of democracy with a claim to be the first American shareholder activist. Mason protested strongly in 1763 when the British government unilaterally revoked the charter of the Ohio Company, where he served as a director. Mason exhorted those who accept the responsibility of serving on boards "never to let the motives of private interest or ambition to induce them to betray, nor the terrors of poverty and disgrace, or the fear of danger or of death deter them."
It would be great to hear Wendy Gramm explain her work at Enron to Mason -- or to the public, for that matter -- instead of hiding behind his name to take cheap shots at reform that might prevent abuses from which she personally profited. |
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Lori
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| Posted: Mon Jan 19, 2009 1:56 pm Post subject: |
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Thanks for the info Lori.
  AND thanks to Al Gore for "inventing" the Internet so people can do their own research on these self serving bass towards and bass towardettes.
GREAT INFO!
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GarySpicuzza
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| Posted: Mon Jan 19, 2009 1:59 pm Post subject: |
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Yeah, she doesn't sound like the kind of chick I'd much care to run around with...  in fact sounds like yet another, 'it's ALL about me'' politican...IMO of course...oh yeah...thanks' big al... 
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