Does the Economy Affect the Insurance Business?
U.S. economic pressures are vital to the health of an insurance organization’s survival. The impact of the economy on the insurance business impacts the entire consumer population which can greatly be affected by various economic factors. All population is affected, ranging from businesses, consumers, taxpayers and to employers. The insurance companies itself are also directly affected.
The insurance business and U.S. economy have recently held many pressures nationwide. Companies in this sector and the entire industry are impacted from economic downsides. Insurance firms have to adjust according to economic conditions to areas such as collecting premiums from its customers, paying taxes and having to deal with various issues of concern. The state insurance companies affect the entire state’s economy as well. Property loss also affects the state population significantly. The insurance industry has had major impact to its state because of the power of it offering financial protection.
The economic concerns are significant in contributing to the outcome of gross state product revenues. The insurance industry pays high tax rates and invests in various bonds for the state. The percentage rates make up a great portion to gross state product. During the economic crisis in 2008, property insured losses reached to the billions in some states. Life insurance and other claims also reached up to billions.
Insurance companies also contribute to the security of its consumers such as individual customers and businesses. When catastrophes or natural disasters occur, the policy owners are affected. Insurance covers such sums as security disasters. Security is crucial to recovery of such tragic incidents and events that can occur. Economic security is secured through claims payments. Claims such as life, business or home insurance are also common. There are property claims which can reach up to billions of dollars annually.
Insurance Companies Today
Insurers should also be concerned of the rise of Big Data, competition, industry regulations and their customers demands for the future. Being strategic and having the right understanding for analytics and business intelligence is also important. Insurance companies knowing what to anticipate for analytics and thinking ahead for long term outcomes will have better competitive advantages. Data is very critical to the Insurance Industry.
Today, the insurance industry is more sensitive to economic recovery and its nationwide exposure making the industry vulnerable to any significant downturn in the global economy. Insurance companies collapsed badly during the financial crisis. Insurance companies are considered to be for the most part, efficiently run, but it can't overcome weakness in its core demographics and economic factors. The delay in consumer payments, increased claims and increasing of premiums has affected their business. Present economic success for insurance can be due to unprecedented demand.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.