The insurance industry is not immune to the financial issues facing all American employers. The federal Bureau of Labor Statistics reported 62,000 job losses in the industry in February.
The good news is that with an industry employing nearly three million people, retirements and job changes will create opportunities in the future, according to the BLS report.
In a recent presentation over the Internet, Robert Hartwig, the president of the Insurance Information Institute, said that while insurers have no direct federal stimulus package provisions, there should be side benefits for the industry. Infrastructure spending will create the need for more property risk insurance and workers' compensation insurance.
Mr. Hartwig noted other commercial lines to benefit from the stimulus package include commercial auto insurance, inland marine and surety coverage, but he cautioned that tax provisions providing incentives to buy cars and homes and acceleration of the depreciation of equipment will have little net impact on exposures.
In his report, Mr. Hartwig identifies infrastructure stimulus spending by state:
- Georgia: $1,141,255,941
- Alabama: $603,871,807
- South Carolina: $544,291,398
- Tennessee: $701,516,776
The expected number of jobs gained or preserved by stimulus spending:
- Georgia: 107,000
- Alabama: 52,000
- South Carolina: 50,000
- Tennessee: 71,000
In "reading the economic tea leaves" for the next four to eight years, Mr. Hartwig agrees with other predictions that the government's role in the lives of Americans will increase.
In relation to financial strength and capacity, the insurance industry has weathered the storm quite well, Mr. Hartwig said, emphasizing that "insurers have the capacity to accommodate stimulus spending."
"Unlike banking," he said, "insurance markets are operating normally." This means that insurers continue to:
- Pay claims (whereas 38 banks have gone under as of Feb. 13);
- Renew existing policies (banks are reducing and eliminating lines of credit);
- Write new policies (banks are turning away people who want or need to borrow);
- Develop new products (banks are scaling back the products they offer).
Mr. Hartwig summarized, "Essentially, the basic function of insurance, the orderly transfer of risk from client to insurer, continues uninterrupted."
David Colmans is the executive director of the Georgia Insurance Information Service. Contact him at (770) 565-3806 or dcolmans@giis.org.
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